Mint Quick Edit | Celebrate remittances but cheapen them too
Summary
- India has been the world’s top recipient of these transfers from abroad in 2024, with inflows of $129 billion. This money is helpful, but we must speed up our digital rupee project and push for global mechanisms that’ll make remittances faster and cheaper.
On remittances from abroad, India remains the world’s top beneficiary.
For 2024, such inflows stood at $129 billion, according to a blog by World Bank economists, almost double that of second-ranked Mexico, which got $68 billion, and more than two-and-a-half times China’s $48 billion.
Globally, such cross-border transfers, usually made by a country’s diaspora to support family members back home, grew 5.8%, stronger than their 1.2% rise in 2023.
Also read: Chart Beat: Stable net remittances a shot in the arm for India’s external position
This reflects a recovery in job markets in rich countries after the pandemic slump. Remittances rose 57% in the past decade, outpacing foreign direct investment, which declined 41%, widening the gap between the two.
Remittances give countries like India valuable foreign exchange, helping keep their external balances on an even keel.
Also read: How FDI flows into India lost momentum
They also tend to hold up well under economic adversity. Cross-border transfers, however, must get cheaper and faster in a world of cryptocurrencies that know no borders.
This is reason enough for India to accelerate its e-rupee project and the West not to back away from global initiatives aimed at digital-currency interoperability.
The US, on its part, should create a digital dollar.
Also read: Mint Explainer: Why India's net FDI is at its lowest level since 2007
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