Bringing it all back home in dollops

economictimes.indiatimes.com:

World Bank's latest migration and development report, owes itself to the tight labour market conditions in the West and the hastened economic recovery in West Asia due to last year's surge in oil prices following the Russia-Ukraine war. Both factors have, however, played themselves out with the central banks weakening global economic activity through a series of interest rate hikes, which, in turn, has had an adverse effect on demand for oil. The effects are visible in the growth rate of remittances to India, which have halved from the previous year and are headed for pre-Covid levels thereafter.

The bump in remittances helped India paper over a burgeoning trade deficit on higher oil prices alongside a flight of capital from its equity market.

The risks to the current account from slowing global trade and to the capital account from heightened financial market volatility persist. India may not have the additional comfort of heightened remittances going forward and would need to step up efforts to boost exports and be more inviting to foreign direct investment. Its pivot away from regional trade pacts to bilateral ones puts both exports and inbound investments at a relative disadvantage.

The size of inbound remittances also diverts policy attention away from the regional imbalance it fosters.

Although emigration patterns are moving away from the south and towards the east, the pace is not rapid enough. Since white-collar emigration has a close association with IT skills, the process could be speeded up by creating new technology clusters in underserved areas. Blue-collar emigration is more widely dispersed.