Despite the Covid-19 pandemic, workers managed to send back more in remittances.
Net worker remittances rose 8.3% sequentially to $12.66 billion in the quarter ended September, according to balance of payments data published by the Reserve Bank of India.
To be sure, despite the pick-up on a sequential basis, worker remittances contracted by 15.78% in July-September quarter on an annual basis compared with a 12.9% fall in April-June. This year-on-year decline was steepest since March 2016, when plunging oil prices led to worker remittances falling by nearly a fourth.
Remittances are coming in better than what we had in our baseline, said Rahul Bajoria, chief India economist at Barclays. Also, with middle-eastern countries starting their vaccinations, Indian remittances may do better than previously thought, he said.
Vivek Kumar, economist at QuantEco Research, said remittances remain weak on an annual basis. Sequentially it has improved but that could also be a seasonal performance. However, considering the contraction expected by the multilateral bodies such as the World Bank, they seem to be doing relatively better, Kumar said. With the global economy expected to shrink in 2020, the fall in remittances was expected to be sharp. In April, the World Bank predicted a 20% decline in global remittances, cautioning this could impact a “crucial financing lifeline for many vulnerable households”.