Outward remittance under LSR dips 28% to $1.92 bn in Oct, shows RBI data

International travel contributed over $970 million or 50 per cent of $1.92 billion remitted by Indians in October 2022

Outward remittances under the Reserve Bank of India’s (RBI’s) liberalised remittance scheme (LRS) dipped 28 per cent month-on-month (MoM) in October to $1.92 billion, which is generally the festive month, latest data showed.

However, on a year-on-year (YoY) basis, it was up 23 per cent compared to $1.56 billion remitted by Indians in October 2021, according to the data released by the Reserve Bank of India in its December bulletin.

International travel contributed over $970 million or 50 per cent of $1.92 billion remitted by Indians in October. Compared to the same period last year, spending on international travel more than doubled this year in October. 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 maintenance of close relatives, followed by overseas education. According to the RBI data, Indians remitted $280.67 million on maintenance of close relatives, $217.87 million for overseas education, and $208.11 million for gifts in October.

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

In FY23 so far (till October), Indians have remitted around $16 billion in outward remittances under the RBI scheme. Outflows under this scheme may touch an all-time high at the end of this financial year, aided by the rise in international travel.

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.