India tops in global remittances in 2014: World Bank

India tops the chart in global remittances in 2014 receiving $70 billion from its immigrants abroad, according to recently released World Bank data. India was followed by China ($64 billion) and Philippines ($28 billion).

Inflow of remittance to developing countries has reached $436 billion in 2014, a rise of 4.4 per cent from last year. However, World Bank expects growth to slow down to 0.9 per cent growth in 2015. The major factors that might impact remittances in 2015 are (a) the uneven recovery in developed countries; (b) lower oil prices and economic developments in Russia; (c) tighter immigration controls; and (d) conflicts that are driving forced migration and internal displacement.

Overall global remittance receipts, including by both developing and high-income countries, are estimated at $583 billion in 2014, and is expected to rise to $586 billion in 2015 and reach $636 billion in 2017.

"Remittances remain a key source of funds for developing countries, far exceeding official development assistance and even foreign direct investment (excluding China). They have proved to be more stable than private debt and portfolio equity flows," says the report.

India and Israel have raised over $40 billion, through their diaspora communities to support balance of payments needs. Israel for instance, used its diaspora money to finance infrastructure, housing, health, and education projects. Several other countries such as Philippines, Sri Lanka, Kenya, Ghana, Nepal and Ethiopia - have issued diaspora bonds to raise money for various needs.

"Israel and India have shown how macro liquidity crises can be managed by tapping into the wealth of diasporas communities. Mexican migrants have boosted the construction sector. Tajikistan manages to nearly double its consumption by using remittance money. Migrants and remittances are clearly major players in today's global economy." said Kaushik Basu, World Bank Chief Economist and Senior Vice President.

Remittances as a percent of GDP are quite high in smaller economies especially in Central Asia and Pacific Islands. Remittances in Tajikistan, for instance is 49 per cent of their GDP, highest amongst all. It's followed by Kyrgyz Republic where remittances constitute 32 per cent of their GDP in 2013.

The cost of sending remittances has also come down marginally. The global average cost of sending $200 declined from 8.6 per cent in Q4 2013 to 8 per cent in Q4 2014. The Sub-Saharan Africa is the costliest region to which to send $200 on an average. "Mobile Money will play a pivotal role in global remittances, helping to reduce fees, improve speed and convenience for users. Most importantly, Mobile Money is a key enabler of financial inclusion" said Alix Murphy, Senior Mobile Analyst at WorldRemit, a global money transfer company.South Asian Region (SAR) has the cheapest cost for transferring remittances. It costs 5.9 per cent to send $200, far below than global average. "Improvements in technology are helping lower costs. In particular, remittance costs in the SAR region are likely to fall further as money transfer companies and mobile money transfer operators are working together with banks in the region to provide instant money transfer services," the report added.