RBI report on inward remittance

Prelims level : Mains level : Paper III: Mobilization of Resources
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  • The United Arab Emirates (UAE) has emerged as the top source of inward remittances, while Kerala has received the maximum funds sent from abroad.


  • Inward remittances are the money, which are transferred or sent by the overseas Indian diaspora to their family, friends, and relatives back in India.
  • It can be in the form of foreign currency, traveller’s cheque or demand draft.

Impacts of Remittance in Economy:

  • India is the largest recipient of migrants’ remittances in the world which comes to roughly 4 per cent of India’s Gross Domestic Product (GDP).
  • Remittances play an important part in developing the countries’ economic systems, individual households, and businesses.
  • The World Bank has acknowledged the importance of remittances by including them in its measure of creditworthiness, allowing nations with high remittance levels to borrow more money than they otherwise could.
  • Remittances positively contributes to the overall economic development of a country that ultimately results in poverty reduction, social empowerment and technological progress.
  • Though India does not heavily depend on this money, but still it adds up to the economy.
  • Microfinance institutions can play a significant role by capturing and transferring remittances to entrepreneurs who can fuel productive activities
  • It definitely enhances a country’s access to international capital market, that is, foreign institutional investments for financing a number of infrastructural and development projects.
  • Migration remittances can be used for creating assets, small savings or setting up some small businesses. The investment in education and health can have positive impact on the human capital formation which will be beneficial for both the country and the family as a whole.
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