Outward remittances under LRS fall 6.85% to $29.56 billion in FY25

RBI data shows LRS outflows dropped to $29.56 billion in FY25 due to weak income growth, rupee depreciation, and lower transfers for education and close relatives

India’s outward remittances under the Liberalised Remittance Scheme (LRS) moderated by 6.85 per cent year-on-year (YoY) to $29.56 billion in FY25, after reaching an all-time high of $31.73 billion in FY24. The decline was attributed to global uncertainty, muted domestic income growth, and a high base effect.

 

In March 2025, outward remittances grew by 10.65 per cent YoY to $2.55 billion, driven by growth in international travel, according to the latest data released by the Reserve Bank of India (RBI). During the same month, the international travel segment posted 12.3 per cent YoY growth to $1.12 billion.

 

While most major components of LRS posted growth, remittances for studies abroad and medical treatment declined by 18.77 per cent and 56.30 per cent YoY, respectively.

 

 

The LRS 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. Initially launched with a $25,000 limit, it has since been revised upward. 

 

In FY25, international travel — the largest LRS segment, accounting for nearly 60 per cent — dipped marginally by 0.25 per cent YoY to $16.96 billion. Funds transferred for maintenance of close relatives and overseas education declined by 19.28 per cent to $3.72 billion and 16.09 per cent to $2.92 billion, respectively.

 

Analysts said that growth in remittances during the April–June quarter was affected by a high base. Weak domestic consumption and income growth, coupled with uncertainty stemming from the United States election, weighed on remittance flows in subsequent quarters.

 

“Last year, global economic uncertainty and a muted domestic income–consumption spiral weighed on foreign remittances. Rupee weakness was a key factor,” said Radhika Piplani, Chief Economist, DAM Capital Advisors.

 

In its report on the economy, analysts at Nuvama stated that in FY25, household income and wage growth in the organised sector had slowed. Rural consumption growth was sluggish, while urban areas were also witnessing a general slowdown.

 

The return of US President Donald Trump to office in November 2024 and the announcement of his trade policies contributed to uncertainty, which in turn affected fund transfers for overseas education.

 

Reports indicated a decline in Indian students applying to universities in the US, Canada, and the UK. Experts said students were increasingly choosing countries with more affordable education, contributing to a fall in education-related remittances.

 

“Students opting for education abroad are finding it difficult to get admission in certain regions, so they are focusing on other places like Australia, New Zealand and others. But the cost of education in these countries is much lower compared to the US and European nations, which has reduced remittances. Also, visa restrictions and rising rejection rates may have discouraged travel,” said Madan Sabnavis, Chief Economist, Bank of Baroda.

 

Additionally, the Indian rupee depreciated by 2.4 per cent in FY25, which impacted the funds sent for maintenance of close relatives. Remittances under the gift component fell by 17.9 per cent YoY to $2.9 billion.

 

However, LRS remittances in equity and debt investments rose 12.45 per cent YoY to $1.69 billion, while the purchase of immovable property abroad increased by 33.11 per cent YoY to $0.32 billion.