Remittances to India Drop in 2020, but UAE and Saudi Still Top Contributors

Indian Remittance Decrease in 2020

Traditionally, India has been the world’s top country in receiving remittances in 2018 and 2019. Although the same amount of remittance is unexpected in 2020 due to COVID-19, World Bank Predicts that India is likely to bounce back in the last quarter of the year. The prediction by World Bank states that money transfer to India would fall by 9 percent to $76 billion in 2020 due to ongoing pandemic and economic recession all across the globe. However, even with a decline, India is still going to retain its position as the topmost foreign remittance recipient globally, followed by China, Mexico, the Philippines, and Egypt.

In the past three years, India has recorded steady growth in foreign remittances amounting to $65.3 billion, $79 billion, and $83 billion in 2017, 2018, and 2019. However, the year 2020 is setting out to be a huge downfall in remittances to India. Although retained at the top position, remittances to India witnessed a huge fall to $14.89 billion in the first quarter of 2020 compared to $15.18 billion in Q4 2019. In Q2 of 2020, the decreasing trend continued amounting to only $12.42 billion.

Remittances to India from UAE and Saudi Arabia

Gulf nations play a critical role in making India the world’s topmost remittance receiver. A whopping number of 51 percent of remittances received by India every year accumulates from the Middle East nations. Especially, Saudi Arabia and UAE contribute heavily to India’s foreign remittance making it grab the first position for the last two years. The UAE topped the list of NRI remittances to India in 2019, followed by the US, Saudi Arabia, and Kuwait. In 2018, India received $13.82 billion from the UAE and nearly $11.24 billion from Saudi Arabia.

In 2020, expat remittances from the UAE amounted to $21.6 billion (nearly AED79. 6 billion) in the first half, with India being the top receiving country. Similarly, India received a hefty remittance from Saudi Arabia, although we do not have concrete data on the figures.

Foreign Remittances Affected in Other Nations

COVID-19 pandemic played a huge role in negatively impacting the foreign remittances received by India throughout 2020. As the deadly virus is expected to continue its course in the next year, the World Bank predicts that remittances to India would decline by 14% by 2021 compared to the pre-pandemic times in 2019.

But, India alone is not suffering the blow of pandemic, economic crisis, and job losses. Many other developing and developed nations have experienced the first-hand impact of COVID-19 on their foreign remittance amount. As per the same World Bank report discussed earlier, the declines in remittances in 2020 and 2021 will affect all other countries. The steepest drop is expected in Europe and Central Asia with 16% and 8% decline respectively. Closely following these two nations are East Asia and the Pacific, showing a fall of 11% and 4%, the Middle East and North Africa with a fall of 8%. The subsequent regions are Sub-Saharan Africa with 9% and 6% decline, South Asia 4% and 11%, and Latin America and the Caribbean with 0.2% and 8% fall in 2020 and 2021.

The fall in remittances percentage is also due to the decline in migrations that has gone down steeply. This for the first time in recent history, but the stock of international migrants is likely to decline as a fresh group of immigrants has slowed down, and the number of return migration has boosted. Be it the health concerns or loss of job opportunities, return migration has increased in all regions of the world as soon as lockdown rules in the host countries were eased. The additional predictions of rising unemployment along with the tightening of visa restrictions on migrants and refugees is expected to increase return migration. However, the bank is still hopeful of reporting some good news with time as the pandemic settles down and the economy comes back on track. As per the World Bank, the job options and the number of migrations would gradually come up by the end of next year or so.

Related Case Study: Indians in the Kingdom of Saudi Arabia

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