Outward remittances stay elevated in August

Outward remittances by Indians remained elevated in August 2015, similar to flows seen in the previous month. The remittances under the Liberalised Remittance Scheme (LRS) for resident individuals grew to $408.4 million in August from $380 million in July.

The remittances in August 2014 were $90.2 million, the same level as July 2014.

The remittance for maintenance of close relatives jumped to $120.2 million in August 2015, up from $11 million in a year ago.

According to Reserve Bank of India (RBI) data, money sent under LRS for resident individuals for studies abroad grew about fivefold in August to $144.3 million from $24.3 million in the same month last year.

The sharp spurt in money sent overseas by resident Indians in July, especially for care of relatives and education, had come under RBI’s scanner. The central bank, in its response to queries from Business Standard, had said that besides studies abroad, remittances do rise in the months of July/August as it coincides with the new academic session.

Nonetheless, RBI is in touch with authorised dealers to get a better understanding of the underlying dynamics, it said.

There has been speculation that some overseas Indians in the US are allegedly using LRS for resident individuals (in India) to dodge American tax agencies. The US government has passed the Foreign Account Tax Compliance Act (Fatca) to unearth black money of US residents outside the country.

Payments for gifts which were $24.7 million in August 2014 jumped to $45.3 million in August 2015. The total money sent abroad towards gifts was $403.5 million, RBI said.

The investment into debt and equity under LRS was $12.9 million in August 2015 up from $19.5 million a year ago.

The outward investment for total investment into debt and equity stood $195.5 million in 2014-15.