REMITTANCES (Syllabus: GS Paper 3 - Economy)

Context: Remittances to the country by non-resident Indians rose 26 percent on year to about $112.5 billion in FY23, underscoring the surge in demand for Indian professionals globally after the pandemic.

• The share of the 10 major countries in inward remittances to India, based on a survey conducted by the Reserve Bank of India for 2020-21, showed that the US was the top source with a share of 23.4 percent in total remittances.
• It Was followed by UAE with 18 per cent, UK (6.8 per cent), Singapore (5.7 per cent) and Saudi Arabia (5.1 per cent).

Remittance

• About: It refers to money that is sent or transferred to another party, usually overseas. 

• It is derived from the word 'remit' which means 'to send back'. 

• It can be sent via a wire transfer, electronic payment system, mail, draft, or cheque.

• It can be used for any type of payment including invoices for business purposes or other obligations like personal transfers made to family and friends.

• Two main components: Personal Transfers in cash or in kind between resident and non-resident households and Compensation of Employees, which refers to the income of workers who work in another country for a limited period of time.
• Significance: Remittances help in stimulating economic development in recipient countries, but this can also make such countries over-reliant on them.