Remittances from non-resident Indians (NRIs) have been India’s bulwark in financing its current account deficit (CAD), even in times of a crisis.
The 34% growth in remittances to the country in 2008, when the financial crisis broke, reflects this reliability. But the outbreak of covid-19 and the various degrees of lockdowns across the globe is threatening this flow now.
World Bank estimates that globally, remittances will shrink by 20% in 2020. India, the biggest receiver of remittances, could witness a 23% slump.
The bulk of the remittances are towards the upkeep of the family back home, while some are towards financial investment. In 2019, remittances were estimated to have totalled $83.1 billion, or 2.8% of gross domestic product,