Covid-19: Impact On Remittance
The novel coronavirus punched the entire world's economy. Each sector is fighting a battle of survival from this deadly virus. People can't travel so the money. In a recent report, World Bank has projected that remittances are expected to fall by approx 23 per cent in 2020 to $64 billion in India.
According to the World Travel and Tourism Council, the COVID-19 pandemic could slash 50 million jobs worldwide in the travel and tourism industry, reflecting a 12-14% reduction in jobs. International travel could be adversely impacted by up to 25% this year, equivalent to a loss of three months of travel.
In 2019, Total remittance around the globe was $573 Billion. India was the top recipient of remittance at the same time with $83 billion that is approx 12-14 per cent of the world’s total remittance.
As per World Bank’s report on remittance, it is projected that this year India will receive $64 billion and face a loss of $19 billion, Which is a huge amount.
Importance To India
In India, remittance plays a crucial role in economy. Every year a huge part of Indian population migrate to some other country for employment and their money transfers contribute in Indian economy.
K.R.Bijimon, Chief General Manager, Muthoot Finance, said,”Covid 19 pandemic and resultant lockdown drastically affected remittance business due to job/income loss and exchange houses not functioning. The migrant workers, who use the cash transfer option are the most affected by the pandemic. Over 3 lakhs NRIs from Middle East opting to return to Kerala and embargo on new job visa by US Govt. suggest that COVID 19 impact is likely to have a long term impact on remittance business.
Considering that migrants tend to be concentrated in urban economic centres (cities), and are vulnerable to infection by the coronavirus, there is a need to include migrants in efforts to fight the coronavirus. Migrant remittances provide an economic lifeline to poor households in many countries; a reduction in remittance flows could increase poverty and reduce households’ access to much‐needed health services, said the World Bank.
Post-Covid 19
According to a recent report by the World Bank, global remittances are projected to face a sharp fall about 20 per cent due to the economic crisis due to the novel coronavirus lockdown. It is said that the projected fall is because of a decline in the wages and employment of migrant workers.
India is predicted to see a decline of 23 per cent in remittances. Barring a sharp decline in 2016 and smaller dips in a few years, remittances to India have grown every year. The South Asia region generally expected to see a decline of 22%.
Sameer Aggarwal, Founder & CEO, RevFin, said,:Last week, the World Bank has predicted a decline of 20 per cent in global remittances due to COVID-19 in the year 2020. This will be the sharpest year on year decline in the last century. Even during the global financial crisis the decline was about 5 per cent.
World bank Said: “The economic crisis induced by COVID‐19 could be long, deep, and pervasive when viewed through a migration lens. Lockdown, travel bans, and social distancing have brought global economic activities to a near standstill. Host countries face additional challenges in many sectors, such as health and agriculture that depend on the availability of migrant workers. Migrants face the risk of contagion and also the possible loss of employment, wages, and health insurance coverage. This Migration and Development Brief provides a prognosis of how these events might affect global trends in international economic migration and remittances in 2020 and 2021.”
It is worth noting that India has the largest diaspora in the world and remittances to India are 11 per cent of total global remittances. 50 per cent remittances to India come from Middle East. Dubai contributes 27 per cent, Saudi Arabia 12 per cent and the US 23 per cent. Since most remittances go to Kerala (19%), Maharashtra (17%) and Karnataka (15%), GDPs of these states will suffer the most due to the decline in remittances.
