Following an upward revision in the limit of outward remittances by individuals under the liberalised remittance scheme from $125,000 to $250,000 by the Reserve Bank of India in February 2015, there has been a sharp rise in outward remittances. The monthly remittance in July 2015 stood at an all-time high of $380 million taking the remittance in the first four months of the financial year 2015-16 at $769 million.
According to the data released by RBI, the remittance in July which is more than three times of the average monthly remittance in the past has been driven by money remitted for maintenance of relatives abroad and for study purposes. While the money remitted for the purpose of maintenance of relatives jumped more than six times (over the previous month) to $124 million, remittances for education purposes jumped over five times to $114 million. Money remitted for travel purposes jumped sharply from $1.5 million in June to $26 million in July 2015.
Experts say that a part of the jump in remittances for educational purposes can be linked to the admissions in universities in the US, the UK and other countries. But since this number is significantly higher this year as compared with $18 million witnessed in July last year, there may be other reasons for it.
This is the first time that the outward remittance has crossed $200 million in a month. The previous high was witnessed in March 2013 when it stood at $180 million.
Under LRS, resident Indians can spend $250,000 (around Rs 1.6 crore) in a year in foreign exchange for purposes including education, investment, travel, medical treatment and maintenance of relatives among others, without seeking RBI’s permission.
While the limit was reduced to $75,000 in 2013 following a fall in rupee, the RBI later raised it to $125,000 in June 2014 after the rupee stabilised. In its monetary policy review meeting in February, RBI further raised the limit and doubled it to $250,000.
