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India’s outward remittances witness 20% surge
The scheme saw a surge to $24.80 Billion from April to December 2023
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The LRS scheme has been gradually revised since February 4, 2004 based on real-time macro and micro economic conditions / Canva
The Liberalised Remittance Scheme (LRS), introduced by the Reserve Bank of India (RBI), experienced a noteworthy surge recently.
According to RBI’s latest data, the outward remittances rose by 20.22 percent to reach $24.80 billion in 9 months, spanning April to December 2023 (9MFY24). This was an increase from $20.63 billion in the corresponding period of the previous fiscal year.
The substantial increase can be attributed to robust growth in various segments, including international travel, equity and debt investments, and maintenance of close relatives.
The data revealed thay outward remittances witnessed a year-on-year rise of 7.89 percent in the third quarter of FY24, totaling $6,457.72 million.
Breaking down the data for the April-December period of FY24, reports said that the investments in equity and debt schemes experienced a robust growth of 56.48 percent reaching $1,090.91 million.
Remittances for the maintenance of close relatives surged by nearly 29 percent , totaling $3,684 million, while remittances for purchasing immovable property overseas rose by 49.67 percent to $183.75 million.
International travel, the largest segment in outward remittance, grew by 22.74 percent to $13.40 billion.
The report also highlights the government's proposal during the Union Budget FY23 to raise the tax collected at source on liberalized foreign remittances. Initially scheduled to be effective from July 1, 2023, the revision was deferred to October 1, 2023.
Meanwhile, certain segments, such as remittances for studies abroad and donations, witnessed declines of 13.94 percent and 22.29 percent, respectively.
Understanding the Liberalised Remittance Scheme (LRS)
The scheme, first introduced in 2004, currently allows Indian residents to send up to US$ 250,000 per financial year (April to March) outside India.
The scheme allows current or capital account transactions, or a combination of both. The nature of transactions could be for medical or educational expenses outside India or purchase of foreign property or shares among others.
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