Outward remittances under the Reserve Bank of India’s (RBI’s) liberalised remittance scheme (LRS) jumped 34.57 per cent month-on-month (MoM) in August to $2.67 billion, the latest data released by the central bank in the October bulletin showed. On a year-on-year (YoY) basis, it was up almost 36 per cent, as Indians increased spending on international travel, among other things.
International travel contributed $1.5 billion of the $2.67 billion remitted by Indians in August. Spends on international travel were almost 2.5 times of what they were in the same period last year. Last year, international travel was marred by Covid-related restrictions all over the world, but it slowly picked up towards the latter part of the year. After international travel, Indians spent most on overseas education, followed by maintenance of close relatives, and gifts.
According to the RBI data, in August, Indians remitted $467.52 million for overseas education, $330.7 million for the maintenance of close relatives, and $221.31 million in gifts.
In Q1FY23, remittances by Indians under LRS jumped 64.75 per cent to over $6.04 billion from $3.67 billion in Q1FY22. The amount remitted in Q1FY23 is even higher than that in Q4FY22, where outward remittances under LRS were to the tune of $5.8 billion.
According to LRS, which was introduced in 2004, all resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year for any permissible current or capital account transaction or a combination of both. Initially, the scheme was introduced with a limit of $25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions.
In FY22, outflows under the LRS scheme at $19.61 billion hit an all-time high, aided by overseas education and international travel. In FY21, outward remittances were badly hit as the pandemic-related restrictions shut down international travel for a long period of time. In FY21, under the scheme, India’s remittances stood at $12.68 billion, down 32.38 per cent from FY20, where remittances under LRS were $18.76 billion.