In accordance with the report on impact of COVID-19 on migration and remittances by World Bank, titled “COVID-19 Crisis: Through a Migration Lens” remittances to India are likely to drop by 23% to USD 64 billion in 2020 from USD 83 billion in 2019 due to COVID-19 impact. In 2019, the remittances were increased by 5.5%. Importantly, India is the world’s biggest recipient of remittances, which bolster the country’s foreign exchange reserves and help fund its current account deficit.What are Remittances?
A remittance is a transfer of money by a foreign worker to an individual in their home country. These are a vital source of income for developing countries as these help families to afford food, healthcare, and basic needs.
Migrant worker remittances to fall 20% amid virus
On the global front, remittances by migrant workers are projected to decline sharply by about 20% due to the economic crisis induced by the COVID-19 pandemic and shutdown. This would be the sharpest decline in recent history.
- The global average cost of remittances declined to 6.8% in the Q1 of 2020, from 6.9% in 2019.
-Remittance flows are expected to fall across all regions, mostly in Europe and Central Asia (27.5%), followed by Sub-Saharan Africa (23.1%), South Asia (22.1%), the Middle East and North Africa (19.6%), Latin America and the Caribbean (19.3%), and East Asia and the Pacific (13%).
-Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7% to $445 billion from $554 billion in 2019. In 2021, remittances to LMICs will recover and rise by 5.6% to $470 billion.
Lockdown in India has impacted 40 million internal migrants
The nationwide lockdown in India has impacted nearly 40 million internal migrants i.e. migrants within the nation which may result in loss of employment. Governments need to address the challenges facing internal migrants by including them in health services and cash transfer and other social programmes and protecting them from discrimination. In India, the number of low-skilled emigrants seeking mandatory clearance for emigration rose slightly by eight percent to 368,048 in 2019.
Remittances to South Asia to dip 22% in 2020 to $109 billion: World Bank
Remittances to South Asia are projected to decline sharply by 22% to $109 billion in 2020 in comparison to 2019 when it saw a growth of 6.1%. This deceleration in remittances is due to global economic slowdown driven by the coronavirus outbreak as well as oil price declines.
About World Bank:
President– David R. Malpass
Headquarters– Washington, D.C., United States
Subsidiaries– International Bank for Reconstruction and Development (IBRD), International Development Association (IDA,) International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).