India to see resilient remittance flow in 2009

Notwithstanding the global economic slump, developing economies including India are expected to witness steady flow of remittance this year, even as private flows are expected to fall by 40-50 per cent, a lead economist World Bank  says. incomes, and migrants typically continue to send remittances when hit by income shocks drawing down their savings, working longer hours, and even cutting into consumption in order to send remittances.

 

Besides, due to increasing anti-immigration sentiments and tighter border controls, especially in the US and Europe, the duration of migration appears to have increased and in that case they would continue to send remittances, Ratha added.

 

Even if the migrants return to their homeland, they are likely to take back accumulated savings, as was the case in India during the Gulf War of 1990-91, which forced a large number of Indian workers in the Gulf to return home.

 

Amid financial crisis, countries are undertaking large fiscal stimulus packages and this would result in an increase in the demand for both native and migrant workers.

 

Besides, though countries have tightened immigration controls in the face of financial slowdown, migrants are on an upper edge than the local citizens, as they are highly flexible in terms of willingness to work for lower wages, to move to other sectors and locations in response to changes in labour market conditions, Ratha added.

 

In the year 2007, India received a whopping USD 27 billion in remittances, beating China and Mexico to become the top country for such inflows.

 

According to the report titled "Migration and Remittances Factbook 2008", the top five recipients of remittances in 2007 were India (USD 27 billion), China (USD 25.7 billion), Mexico (USD 25 billion), the Philippines (USD 17 billion), and France (USD 12.5 billion).

 

"Remittance flows to developing countries are expected to remain resilient compared to private flows which are expected to fall by 40-50 percent in 2009," World Bank lead economist Dilip Ratha said in a blog posting on the World Bank website.

 

Although new flow of migrants are falling, remittances are persistent over time. As per the latest World Bank data, the migrant stocks are not getting affected.

 

"Remittances are sent by cumulated flows of migrants over the years, not only by the new migrants of the last year or two," the World Bank said.

 

Besides, in the past, migrant flows have represented "some two per cent of migrant stocks in the United States, four per cent in the EU15 countries and about five per cent in Gulf Cooperation Council countries," the World Bank added.