For many low-and middle-income countries, remittances act as a major source of income. 

In 2024, India received an estimated $129.1 billion worth of remittances, the highest ever for a country in any year. Moreover, India’s share in global remittances was 14.3% this year, the highest such share since the turn of the millennium for any country. The conclusions are based on a blog article published last week by the World Bank.

Remittances refer to the money that individuals working abroad send back to support their families in their home country. They are often a crucial source of income for households in developing countries and can contribute significantly to the economy of the recipient country.

Following India, Mexico and China received the largest remittances in 2024.

Chart 1 shows the top 10 receivers of remittances in $ million in 2024.

The Philippines, France, Pakistan, Bangladesh, Egypt, Guatemala, and Germany are the other countries on the list. While China was third on the list, past years’ numbers provide interesting insights.

Chart 2 shows the share of global remittances for the top 10 countries mentioned in Chart 1 in the 2000-2024 period.

China’s share of remittances grew from less than 1% in the early 2000s to over 10% by the late 2000s and early 2010s, matching India’s numbers, before gradually declining to below 10% in the late 2010s.

From 2020, the share declined rapidly reaching a two-decade low of 5.3% in 2024. According to the World Bank, China’s rising economic prosperity and an ageing population slowed the pace of emigration of less-skilled people, which contributed to this decline.

India’s share has remained above the 10% mark for most of the years since 2000, with few exceptions. In fact, in the post-pandemic years, there has been a rapid increase in its share. India’s share in global remittances was twice the share of Mexico’s in 2024 (7.5%); Mexico was a distant second.

Though India leads in absolute remittance inflows, in some economies, remittances play a more critical role in funding current account deficits and fiscal shortfalls.

To better understand this, Chart 3 depicts estimated remittances in 2024 as a share of a country’s GDP. Each circle is a country. The farther the circle is to the right, the higher the remittance in 2024 as a share of GDP. The bigger the circle, the higher the remittance in 2024 in absolute figures.

In Nepal, remittances formed over 25% of the GDP in 2024. In Tajikistan, Nicaragua, Lebanon, Samoa, Honduras, and Tonga, the share of remittances in 2024 formed over 25% of their respectives GDPs. In India, remittances formed 3.3% of the GDP this year.

For many low-and middle-income countries, remittances act as a major source of income. In 2024, these countries received $685 billion as remittances, the highest ever in a year. According to the blog, remittances to these countries have consistently outpaced other types of external financial flows.

In recent years, remittances have even surpassed Foreign Direct Investment (FDI) in low-and middle-income countries put together. FDIs are investments by a foreign country to control or run a business in another country. Remittances are also much higher than the official development assistance (ODA) received by these countries. ODA is the aid from rich countries to help poorer ones develop, often through grants or cheap loans.

Chart 4 compares remittances, FDI, and ODA received by low-and middle-income countries between 2000 and 2024.

Over the past decade, remittances increased by 57% while FDI declined by 41% in low-and middle-income nations, the blog notes.

Source: The data for the charts were sourced from a blog article published by the World Bank on December authored by Dilip Ratha, Sonia Plaza and Eung Ju Kim

vignesh.r@thehindu.co.in

New Delhi:

A nearly 26 per cent rise in FDI to USD 42.1 billion during the first half of the current fiscal year 2024-25 helped India’s gross foreign direct investment (FDI) inflows reach an impressive USD 1 trillion since the start of this century.

India has achieved a remarkable milestone in its economic journey, with gross foreign direct investment (FDI) inflows reaching an impressive USD 1 trillion since April 2000.

This landmark achievement was helped by a nearly 26 per cent rise in FDI during the first half of 2024-25.

Ministry of Commerce and Industry in a statement asserted that such growth reflects India’s growing appeal as a global investment destination.

“FDI has played a transformative role in India’s development by providing substantial non-debt financial resources, fostering technology transfers, and creating employment opportunities.”

“Initiatives like ‘Make in India’, liberalised sectoral policies, and the Goods and Services Tax (GST) have enhanced investor confidence, while competitive labour costs and strategic incentives continue to attract multinational corporations,” the Commerce Ministry said.

Over the last decade (April 2014 to September 2024), total FDI inflows amounted to USD 709.84 billion, accounting for 68.69 per cent of the overall FDI inflow in the past 24 years.

To promote FDI, the government has put in place an investor-friendly policy, wherein most sectors, except certain strategically important sectors, are open for 100 per cent FDI under the automatic route.

Further, to simplify tax compliance for startups and foreign investors, the Income Tax Act, 1961 was amended in 2024 to abolish angel tax and to reduce the income tax rate chargeable on the income of a foreign company.

As India continues to align with global economic trends, the government believes it is well-positioned to further strengthen its role on the global stage, fostering sustainable growth and development.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Bengaluru:

India is likely to soon overtake China as the most influential in a key emerging markets index, pulling in more foreign funds and adding fuel to a stock market rally that, though already among the best globally, is “only past the halfway mark”, Morgan Stanley said.

India’s weightage in the MSCI emerging markets index rose to 19.8% after a rejig in August, closing in on China’s 24.2%. India’s weightage has steadily increased from 9.2% in December 2020, while China’s has dropped from 39.1%.

“A rising weight essentially means more absolute foreign flows,” analysts led by Ridham Desai said in a note on Wednesday.

“In the context of India being underweight in the average emerging markets portfolio, this is even better for foreign portfolio flows.”

Foreign portfolio investors (FPIs) have bought shares worth 531.78 billion rupees ($6.33 billion) so far in 2024, and have remained net buyers since June, bolstered by policy continuity after the country’s elections and an imminent start to global interest rate cuts.

So far, the sustained inflows from domestic institutional investors, mutual funds and retail traders have helped power the benchmark Nifty 50 to record highs. Its 16% jump this year is more than most other markets, including China.

Mr Desai expects the rally to continue as fiscal consolidation allows private borrowing and spending to fuel the next leg of earnings growth and as higher FII inflows will keep liquidity in surplus, lending resilience.

“We think we are only past the halfway mark in the current bull market. A bull market peak for India is possibly still in the future and the weight in the EM index could have some more distance to travel before it peaks.”

Morgan Stanley retained India as its top pick among emerging markets and second favourite, behind Japan, in the Indo-Pacific region.

Among stocks, it prefers cyclicals over defensives and large-caps over small-caps. And among sectors, it is ‘overweight’ on financials, technology, consumer discretionary and industrials, and is ‘underweight’ on others. ($1 = 83.9690 Indian rupees)
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Bengaluru:

India is likely to soon overtake China as the most influential in a key emerging markets index, pulling in more foreign funds and adding fuel to a stock market rally that, though already among the best globally, is “only past the halfway mark”, Morgan Stanley said.

India’s weightage in the MSCI emerging markets index rose to 19.8% after a rejig in August, closing in on China’s 24.2%. India’s weightage has steadily increased from 9.2% in December 2020, while China’s has dropped from 39.1%.

“A rising weight essentially means more absolute foreign flows,” analysts led by Ridham Desai said in a note on Wednesday.

“In the context of India being underweight in the average emerging markets portfolio, this is even better for foreign portfolio flows.”

Foreign portfolio investors (FPIs) have bought shares worth 531.78 billion rupees ($6.33 billion) so far in 2024, and have remained net buyers since June, bolstered by policy continuity after the country’s elections and an imminent start to global interest rate cuts.

So far, the sustained inflows from domestic institutional investors, mutual funds and retail traders have helped power the benchmark Nifty 50 to record highs. Its 16% jump this year is more than most other markets, including China.

Mr Desai expects the rally to continue as fiscal consolidation allows private borrowing and spending to fuel the next leg of earnings growth and as higher FII inflows will keep liquidity in surplus, lending resilience.

“We think we are only past the halfway mark in the current bull market. A bull market peak for India is possibly still in the future and the weight in the EM index could have some more distance to travel before it peaks.”

Morgan Stanley retained India as its top pick among emerging markets and second favourite, behind Japan, in the Indo-Pacific region.

Among stocks, it prefers cyclicals over defensives and large-caps over small-caps. And among sectors, it is ‘overweight’ on financials, technology, consumer discretionary and industrials, and is ‘underweight’ on others. ($1 = 83.9690 Indian rupees)
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)