Money spent abroad grows 29x in a decade

MUMBAI: The increase in forex spends by Indians has far outpaced the growth in remittance of foreign exchange workers into India over the decade.

Money spent abroad has gone up nearly 29 times - from $1.1 billion in FY14 to $31.7 billion in FY24 - largely due to travel. The amount sent home by foreign workers has gone up 71% from $70 billion to $120 billion over the same period. India continues to be the highest recipient of foreign remittances, getting nearly twice the amount received by Mexico at $66 billion.

According to a study by the Bank of Baroda, money flowing into India has increased at a CAGR of 5.5% over the last decade - higher than the global growth rate of 4%. Only Mexico, at 10%, has grown its inward remittances at a faster decadal CAGR than India, which has helped it overtake China to claim the second place.

"From just $1.1 billion in FY14, remittance outflows increased to $31.7 billion in FY24. This translates into a CAGR of over 40%, which is much higher than the CAGR of remittance inflows in the same period," said Aditi Gupta, an economist with BoB. According to Gupta, the rise of an aspiring middle-class has ensured that discretionary spending of households goes up, which is reflected in higher travel expenses to foreign countries. In 2024, BoB expects inflows to continue to grow.

Global growth is expected to gradually improve, with the US expected to remain resilient. Labour markets in the US, UK and Eurozone remain robust with unemployment rates near record lows, which bodes well for inward remittances. Further, while there seems to be some slowdown in remittance inflows from the Gulf Cooperation Countries (GCCs), stable oil prices should help in reviving inflows from the region, the report said.

In terms of sources of remittance inflows globally, the US is the largest source of remittances to the world, accounting for over 25% of total remittance inflows in the world in 2021. This was followed by the GCCs at 17%. Apart from these, Germany, the UK and Russia are also important contributors to global remittance flows.