Monthly outward remittances under the Liberalized Remittance Scheme (LRS) touched an all-time high of $1.96 billion in August, according to data released by the RBI,
LRS was brought out by the RBI in 2004 which allows resident individuals to remit a certain amount of money during a financial year to another country for investment and expenditure. Resident individuals may remit up to $250,000 per financial year, according to the prevailing regulations.
The previous high was $1.87 billion in August 2019. For the full year FY’21, it amounted to $12.68 billion. The year 2019-20 had witnessed the highest outward remittances of $18.76 billion in any financial year since LRS was introduced in 2004.
Remittances for travel, too, hit an 18-month high of $574 million — the highest since February 2020, when several countries started imposing flight and travel restrictions following the Covid outbreak. This August also witnessed remittances of $284.8 million for the purpose of “maintenance” of close relatives in August 2021.
Students are taking admissions in foreign universities after a year-long lull. Traditionally August witnesses’ high outward remittance as universities overseas start their new session in September, students remit funds for fee, accommodation, tickets and other set-up costs.
This year, more Indian students have been able to obtain admissions overseas; several universities have added capacity following the evolution of a hybrid mode of education delivery and Indian students have increased their share because of their competitiveness.
Arijit Sanyal, MD and CEO, HDFC Cedilla Financial Services, said the organization saw a big rise in disbursements during the month. “Last year, the demand had gone down because of Covid lockdowns. So, this year there has been a bunching-up of demand, which has led to the rise. Also, there are new geographies that students are going to and that has led to a higher number of students going out,” he said.
According to Sanyal, while the US continues to get the major share of students, Canada and the UK have become bigger markets and there are “many other new places where more and more students are going for education”.
India has witnessed a sharp surge in remittances over the last seven years. While outward remittances under LRS amounted to $1.325 billion in the financial year 2014-15, it jumped to 4.6 billion in 2015-16 and over the next few years rose to $18.76 billion in 2019-20.
Aggregate outward remittances under LRS since April 2014 amounted to $77.6 billion. While nearly $20 billion have been remitted for “study abroad”, over $24 billion have been remitted for travel purposes.
Sources: The Hindu, The Indian Express