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Indians remitted $6 bn in Q1FY23 under LRS scheme

August 22, 2022 13:23 IST

Outward remittances under the Reserve Bank of India’s (RBI’s) liberalised remittance scheme (LRS) made a strong comeback in the first quarter of FY23 as Indians increased spending on international travel, maintenance of close relatives, and gifts.

Remittance

Photograph: Dado Ruvic/Reuters

The latest data for Q1FY23 released by the RBI shows that remittance by Indians under the scheme 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 remittance under LRS was to the tune of $5.8 billion.

 

In April, about $2.02 billion was remitted, followed by $2.03 billion in May, and $1.98 billion in June, data released by RBI in the August bulletin shows.

International travel contributed $2.92 billion of the $6.04 billion remitted under LRS in Q1FY23, thus constituting almost 48 per cent of the money remitted under the LRS scheme.

In the same period a year-ago, Indian’s spent $856.43 million on international travel as Covid-19 restrictions around the world slowed down international travel.

Maintenance of close relatives formed the second largest segment after international travel, with Indian’s remitting just over $1 billion in Q1FY23.

Money remitted under the category “gift” constituted the third largest segment, with India’s remitting around $770.66 million in Q1, as against $489.15 million in the year-ago period.

Overseas education constituted the fourth largest segment, with $738.42 million remitted in the April – June quarter, against $1.16 billion in the year-ago period.

According to the scheme 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.

The scheme was introduced on February 4, 2004, with a limit of $25,000.

The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions.

Outward remittances under LRS dipped significantly in FY21 as the pandemic-related restrictions shut down international travel for a long period of time.

In FY21, under the scheme, India’s remittance was $12.68 billion, down 32.38 per cent from FY20, where remittances under LRS was $18.76 billion.

As Covid-related restrictions eased in several countries in FY22, international travel opened up, resulting in $19.6 billion in outward remittance under LRS, which was an all-time high.

Travel contributed about $6.91 billion, which was more than double of the amount spent in FY21.

In FY20, however, spending on travel by Indians was also almost $6.95 billion.

This indicated that overseas travel spending had touched pre-Covid levels.

Subrata Panda in Mumbai
Source: source image