Outward remittances under the Liberalised Remittance Scheme (LRS) for individuals rose about 31 per cent year-on-year (yoy) in July 2021 to $1.31 billion, mainly on the back of increase in expenses towards studies and travel, according to Reserve Bank of India (RBI) data.
The remittances were $995.16 million in the year ago period.
This comes even as the global economy seems to be gradually recovering from the unprecedented disruption caused by the Covid-19 pandemic.
As per RBI norms, all resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
The Scheme was introduced on February 4, 2004, with a limit of $25,000 and revised in stages.
In July 2021, remittances towards studies abroad jumped about 53 per cent y-o-y to $423 million; towards travel by 41 per cent to $347 million;gift was up about 35 per cent to $175 million; and towards investment in equity/debt by 48 per cent to $50 million.
Remittance towards maintenance of close relatives was almost static at $243 million.
T Rabi Sankar, Deputy Governor, RBI, in a recent speech, observed that LRS for individuals, while it is open for both current and capital account transactions, is largely (more than 90 per cent) in current account transactions such as travel and studies.
“As the LRS Scheme has operated for some time, there may be a need to review it keeping in mind the changing requirements such as higher education for the youth, requirement of start-ups etc.
“There might even be a case for reviewing whether the limit can remain uniform or can be linked to some economic variable for individuals,” he said.
Outward remittance under LRS had come down about 32 per cent yoy (or by $6.08 billion) in FY21 to $12.68 billion ($18.76 billion in FY22) as the pandemic raged.