Outward remittances under LRS hit new high of $31.73 bn: RBI data

India’s outward remittances under the Liberalised Remittance Scheme (LRS) hit a new high of $31.73 billion in FY24, on the back of robust growth in the international travel segment.

According to the latest data released by the Reserve Bank of India (RBI), remittances increased 16.91 per cent year-on-year (Y-o-Y) from the previous high of $27.14 billion clocked in FY23.

The remittances have seen a continuous increase in the last 10 years owing to improved per capita income in the country, which is reflected mainly in the growth of travel and overseas education, among other segments, according to experts.

“The improvement in per capita income and a rise in discretionary spending by households over the last decade could be one of the reasons driving the growth in the travel segment,” said Sakshi Gupta, principal economist, HDFC Bank.

Remittances under LRS, which had witnessed a steep decline in FY21 due to the Covid-19 pandemic, saw recovery from FY22 and continued its upward momentum on the back of ‘revenge spending’ and release of pent-up demand among the public.

In FY24, the international travel segment rose to $17 billion, 24.84 per cent higher than $13.66 billion in the year-ago period. This growth was followed by funds used for the maintenance of close relatives and overseas education, which stood at $4.61 billion and $3.58 billion, respectively.

Madan Sabnavis, chief economist, Bank of Baroda, said, “I think it (remittances under LRS) will continue to rise because there is a stark increase at higher income levels. Owing to this increase, the growth in the travel segment is likely to continue as people will continue to travel. Further, the improved income in the country is also likely to boost the overseas education of children.”

Furthermore, there has also been a 20.29 per cent growth in equity and debt investments through LRS from the year-ago period to $1.51 billion as investors took advantage of the global market scenario.

In March 2024, overall outward remittances stood at $2.30 billion, which was 22.13 per cent lower than $2.95 billion in March 2023.

According to March data, international travel, which accounted for over 50 per cent of the entire outward remittances under the scheme, dropped by 12.82 per cent to $1.02 billion from the same year-ago period.

The remittance by Indians under the scheme for the maintenance of close relatives was $394.13 million, followed by $318.66 million for gifts, and $224.70 million as investment in equity and/or debt.

The LRS scheme was introduced in 2004, allowing all resident individuals to remit up to $250,000 per financial year for any permissible current or capital account transaction, or a combination of both, free of charge.