In the financial year 2024 (FY24), Indians residing abroad sent an unprecedented US$ 107 billion in remittances to their families in India. This milestone marks the second consecutive year that remittances have surpassed the US$ 100 billion threshold, highlighting the crucial role of the Indian diaspora in supporting their home country's economy. Remarkably, this net remittance amount nearly doubles the combined total of US$ 54 billion from foreign direct investments (FDI) and portfolio investments during the same period, underscoring the significant impact of remittances on India's balance of payments.

According to balance of payments data, gross remittances from the Indian diaspora reached an impressive US$ 119 billion in FY24. After accounting for the repatriation of income by foreign residents and other related expenses, the net private transfers amounted to US$ 107 billion. This substantial inflow of funds not only supports families in India but also contributes to various investments, thereby bolstering the nation's economic stability.

Recent studies have highlighted a strong correlation between remittances, migration levels, and employment conditions in the countries of origin. These studies suggest that favorable employment conditions in destination countries lead to higher remittance flows. Moreover, the cost of remitting funds plays a significant role in influencing the volume of overseas remittances. Lower transaction costs encourage more frequent and higher remittance amounts, benefiting both the sender and the recipient.

A Reserve Bank of India (RBI) survey on post-COVID-19 remittances revealed that the United States emerged as the primary contributor, constituting 23% of the total remittances to India. This trend underscores the strong economic ties and the significant Indian diaspora presence in the United States. In contrast, remittances from the Gulf region, traditionally a major source, have seen a decline. This shift indicates changing migration patterns and economic conditions in the Gulf countries.

The majority of the remitted funds are intended for familial support, ensuring the well-being of families in India. Additionally, a portion of these funds is allocated to investments, such as deposits, which further contribute to the country's financial system. The RBI survey's findings align with global trends, where remittances play a vital role in supporting developing economies.

In 2023, the United States remained the largest global contributor to remittances, reflecting the significant presence of migrant workers and professionals from various countries. India continued to be the leading recipient of remittances, receiving US$ 125 billion. Other major recipients included Mexico (US$ 67 billion), China (US$ 50 billion), the Philippines (US$ 40 billion), and Egypt (US$ 24 billion). These figures highlight the critical role of remittances in sustaining the economies of these countries.

The World Bank’s "Migration and Development Brief," released in December, emphasized India's leading position in remittance receipts from its diaspora for over two decades. This consistent lead is driven largely by the migration of IT professionals to North America and Europe since the 1990s. The report's lead economist, Mr. Dilip Ratha, noted that remittance flows to developing nations have outpaced foreign direct investment and official development assistance in recent years. This trend is expected to continue, with a projected 3.1% increase in remittance flows in 2024.

The significant contributions of remittances to India's economy cannot be overstated. These funds provide a lifeline for many families, supporting their daily needs, education, healthcare, and other essential expenses. Moreover, remittances contribute to the country's foreign exchange reserves, enhancing its financial stability and reducing dependency on external borrowing.

In conclusion, the record US$ 107 billion in remittances sent by Indians abroad in FY24 underscores the enduring bond between the Indian diaspora and their homeland. This milestone reflects the economic strength and resilience of Indian migrants, particularly in the United States, and highlights the importance of remittances in supporting India's economy. As global migration patterns and economic conditions evolve, the role of remittances will continue to be a critical factor in the development and prosperity of countries like India.

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