In fiscal year 2023-24, the Indian diaspora achieved another remarkable milestone and surpassed all its previous records with $107 billion in remittances sent back home to India.
This achievement not only highlights the support of overseas Indians for their families but also shows the important role they play in India's economy despite global challenges.
Let's find out how India, the largest recipient of remittances globally, has benefited its economy and increased investments in the country.
Record Breaking Remittance Sent to India
In fiscal year 2023- 24, the Indian diaspora, scattered across the globe, once again set a record by sending more than $100 billion in remittances to their families back home in India. This figure not only surpassed the previous milestone but also emphasised the key role of the Indian diaspora in India's financial inflows.
It's worth noting that these remittances exceeded the combined net Foreign Direct Investment level and portfolio investment amounting to $54 billion. In fact, the scale at which Indians received their remittances in 2023 even exceeded the GDP of 116 countries recorded in 2022. About 55% of the remittances come from four States: Kerala, Maharashtra, Tamilnadu, and Karnataka.
India’s Remittance Surge and Global Comparison
According to the World Bank, in 2021, India emerged as the leading global recipient of remittances, receiving about $89.4 billion. The following year, in 2022, the remittance flow continued to increase as Indians from abroad sent even more money back home and crossed a milestone of $100 billion for the first time.
In the year 2023- 24, the Indian diaspora again made a historic high of sending $107 billion to India and reaffirmed its position as the top global recipient of remittances.
When we compare India’s remittance data with other countries like Mexico, which secured second position with $67 billion, it only represents 53% of what India did. The same goes for China, which secured third position in receiving remittances and received about $50 billion, equating to just 40% of India's remittances.
Remittance Drives Economic Growth and Family Support
In the fiscal year 2023-24, remittance from the Indian diaspora, which includes private transfers within the balance of payments, accounted for $119 billion. After deducting income repatriation and making other adjustments, net private transfers amount to $107 billion.
According to a recent survey conducted by the Reserve Bank of India, this substantial influx of funds in India plays an important role in not only supporting families and fulfilling their needs but also is a major part of investment in assets like deposits, mutual funds, real estate etc.
Challenges Ahead and India Overcoming Them
If you look at the growth trajectory of remittances in the global economy, a sort of moderation is visible towards low and middle-income countries. The projections show a 3.1% decrease in global remittances in 2024.
This decrease is due to lower economic growth in high-income countries. Given these challenges, the importance of remittances for low and middle-income countries remains questionable, as they are the lifeline of many.
Despite the challenges posed by the global economy, such as a weaker job market, India has continued to lead as the largest recipient of remittances from its overseas communities.
This position has been maintained for over two decades. Indian professionals in North America and Europe, especially in sectors like IT, have significantly contributed to this success.
Conclusion
The contribution of the Indian diaspora has once again demonstrated its crucial role in the growth of India’s economy. They provide huge support to their families and also contribute to the substantial inflow of capital in India. Their contribution has exceeded the level of FDI and portfolio investments in the country.
Rupali enjoys writing about everything related to money (in India and around the world). A MICA graduate in Communications, she has over seven years of experience in content creation and communication strategy for various user touchpoints, from CRM to UX for apps and websites, especially in fintech and healthcare. Outside of work, you'll find her binging on true crime documentaries or cooking up a storm.
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