With the coronavirus pandemic having a catastrophic effect on the global economy, Indians are sending less money abroad and the April figures have hit 50-month low.
With the coronavirus pandemic having a catastrophic effect on the global economy, Indians are sending less money abroad and the April figures have hit 50-month low. Indian remittances fell to $499.14 million in April 2020 under the Liberalised Remittance Scheme (LRS), which is a dip of 61% from $1,287.91 million in the comparable period a year ago, according to latest data of the Reserve Bank of India, The Indian Express reported. This year’s April number is lowest since February 2016 when outward flow was at $449.28 million. While a decline in remittances was visible in March 2020 as well, the situation went furthermore southwards in April.
Remittances sent for travel purposes have been worst hit with the outward flow falling about 72% $429.75 million a year ago to $121.13 million in April this year. About 20 lakh Indians travel overseas every month but the same has come to a grinding halt ever since the governments across the world imposed travel restrictions in the wake of coronavirus. While India has opened its domestic flight services, international travel is still banned. Meanwhile, the money sent for education has also seen a hit and has declined by nearly 70%. While Indians sent $252.84 million in April last year, the same has fallen to $78.76 million in April this year. More than 7 lakh Indian students were studying at foreign institutions in 2018.
What is LRS?
Under RBI regulations, authorised dealers may remit $250,000 by resident individuals, including minors, per financial year. This year, the category which contributes the highest amount to remittances — “Maintenance of close relatives” — under LRS has recorded a decline of 50%. While it stood at $296.14 million last year, it has fallen to $148.25 million in April 2020. Other categories which have reported considerable declines are money sent for purchase of immovable property abroad; investment in equity/debt; deposit; gift and medical treatment. The outflows had reached a record level in the last financial year.