Vastavam web: Notwithstanding a significant 8.9 per cent drop in remittances to India in 2016, the country retained the top spot among remittances receiving nations, according to a World Bank report.The World Bank, in its latest report, said that the remittances to developing countries fell for a second consecutive year in 2016, a trend not seen in three decades.This was attributable mainly to the drop in oil prices and fiscal tightening in the oil producing countries in the Middle East, which has a significant Indian migrant population accounting for a large chunk of remittances.
Global remittances, which include flows to high-income countries, contracted by 1.2 per cent to USD 575 billion in 2016, from USD 582 billion in 2015.Low oil prices and weak economic growth in the Gulf Cooperation Council (GCC) countries and the Russian Federation are taking a toll on remittance flows to South Asia and Central Asia, while weak growth in Europe has reduced flows to North Africa and Sub-Saharan Africa, it said.The decline in remittances, when valued in US dollars, was made worse by a weaker euro, British pound and Russian ruble against the US dollar.As a result, many large remittance-receiving countries saw sharp declines in remittance flows.
According to the report, remittance to the South Asian region declined by 6.4 per cent in 2016 in the face of lower oil prices and fiscal tightening in the GCC countries.”Nationalisation” policies aimed at lowering the unemployment rate of nationals have slowed employment of foreign workers, impacting remittance flows to South Asia, the report said.”Remittances to India declined by 8.9 per cent in 2016, to USD 62.7 billion. In Bangladesh, remittances declined by an estimated 11.1 per cent in 2016,” the report said, adding that in Pakistan, the 12 per cent growth witnessed in 2015 moderated to an estimated 2.8 per cent in 2016.
In Sri Lanka, remittance growth was estimated at 3.9 per cent in 2016, the report said.Remittances accounted for 2.9 per cent of India’s GDP in 2016.It was highest for Nepal with 29.7 per cent of the GDP, followed by Sri Lanka (8.8 per cent), Pakistan (6.9 per cent), and Bangladesh (6 per cent).While for India, remittances were not large as a proportion of the GDP, however, there were subnational variations in the impact of remittances.The World Bank said moving forward, remittance growth in South Asia is projected to remain muted, because of low growth and fiscal consolidation in GCC countries.