Outward remittances under RBI's LRS decline 8.2% in April-February

Overseas remittances for the purchase of immovable property rose by 28.32 per cent Y-o-Y to $277.7 million

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Outward remittances under the Reserve Bank of India’s (RBI’s) Liberalised Remittance Scheme (LRS) during April 2024-February 2025 of FY25 continue to be lower than last year.

 

Remittances dropped 8.21 per cent year-on-year (Y-o-Y) to $27.02 billion from $29.43 billion in the year-ago period.

 

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. In the initial phase, the scheme was introduced with a limit of $25,000, which was gradually revised.

 

During April-February of FY25, the largest segment — international travel — slipped around 1 per cent to $15.84 billion from $16 billion.

 

This moderation was coupled with a nearly 22 per cent Y-o-Y fall in growth of funds used for maintenance of close relatives to $3300.5 million.

 

Remittances for overseas education declined 16 per cent to $2758.9 million from last year. Overseas remittances for purchase of immovable property rose by 28.32 per cent to $277.7 million.

 

“Moderation in the period has happened primarily because of a reduction in spending on travel. Perhaps this seems to be a seasonal pattern because there aren’t many holidays. Apart from that, there also seems to be a fall in students going abroad. Although it is early to be sure, there may be uncertainty around policies of the Trump administration in terms of immigration, among others,” said Sakshi Gupta, principal economist, HDFC Bank.

 

Overseas remittances in February 2025 slipped 2.44 per cent to $1.96 billion from $2.01 billion in the same period last year. 

 

In February 2025, remittances under the international travel segment rose 3.5 per cent to $1.09 billion compared to $1.05 billion in the same month last year.

 

However, remittances under the scheme for overseas education dropped 26.19 per cent to $182.17 million in the month. And, funds for maintenance of close relatives also reduced 11.78 per cent to $235 million Y-o-Y.

 

“It is difficult to assess what the impact of the Trump administration's policies will be right now. This is because there is uncertainty about his policies at this stage. In the near term, I think uncertainty could weigh on investment in equity and debt. But, with the kind of trade agreements we have with the US, there seems to be an indication that the flows are tight. This, I think will be both from the perspective of capital flows as well as trade,” Gupta added.