India has topped the global chart of remittances with a whopping USD 71 billion in remittances in 2013, just short of three times the FDI it received in 2012, according to a revised World Bank forecast.
Top recipients of officially recorded remittances for 2013 are India (with an estimated USD 71 billion), China (USD 60 billion), the Philippines (USD 26 billion), Mexico (USD 22 billion), Nigeria (USD 21 billion), and Egypt (USD 20 billion), the report issued yesterday said.
Other large recipients include Pakistan, Bangladesh, Vietnam and Ukraine.
As a percentage of GDP, the top recipients of remittances, in 2012, were Tajikistan (48 per cent), Kyrgyz Republic (31 per cent), Lesotho and Nepal (25 per cent each) and Moldova (24 per cent).
"These latest estimates show the power of remittances," said Kaushik Basu, Senior Vice President and Chief Economist of the World Bank.
"For a country like Tajikistan they constitute half the GDP. For Bangladesh remittances provide vital protection against poverty. In terms of volume, India, with USD 71 billion of remittances, tops the global chart. To put this in perspective, this is just short of three times the FDI it received in 2012," he said.
"Remittances act as a major counter-balance when capital flows weaken as happened in the wake of the US Fed announcing its intention to reign in its liquidity injection programme.
Also, when a nation's currency weakens, inward remittances rise and, as such, they act as an automatic stabiliser," Basu said.
According to World Bank estimates, India and China alone will represent nearly a third of total remittances to the developing world this year.
Remittance volumes to developing countries, as a whole, are projected to continue growing strongly over the medium term, averaging an annual growth rate of nine per cent to reach USD 540 billion in 2016.
Global remittances, including those to high-income countries, are estimated to touch USD 550 billion this year, and reach a record USD 707 billion by 2016, the Bank said.
Remittances to the developing world are expected to grow by 6.3 per cent this year to USD 414 billion and are projected to cross the half-trillion mark by 2016, the report said.
"Remittances are the most tangible and least controversial link between migration and development," said Dilip Ratha, Manager of the Migration and Remittances Team at the Bank's Development Prospects Group.
"Policymakers can do much more to maximise the positive impact of remittances by making them less costly and more productive for both the individual and the recipient country," Ratha said.