Indians are spending significantly on overseas travels as the expenses on foreign trips have increased more than three fold in the past five years, according to the Reserve Bank of India (RBI) data.
With the increase in the number of people travelling abroad, the outward foreign exchange remittances (OERs) they made increased to an average of nearly $1.42 billion (roughly Rs 12,500 crore) per month in FY 2023-24, compared to just $400 million (roughly Rs 3,300 crore) per month on average five years ago in FY 2018-19, the RBI data showed.
According to the apex bank, Indians withdrew a total of $17 billion (Rs 1,41,800 crore) for foreign travels in FY 2023-24 under the RBI’s Liberalised Remittance Scheme (LRS). It was 24.4 per cent higher than the previous year’s figure of $13.66 billion (Rs 11,400 crore).
Travel has emerged as the major source of remittances from India, accounting for 53.6 per cent of total remittances in FY24, while the share was just 1.5 per cent in FY 2013-14 and 35 per cent in FY 2018-19.
With the rise in disposable income and the growth of the emerging middle class in the country, the number of trips abroad has increased. This trend has further strengthened after travel restrictions were lifted due to the Covid-19 pandemic.
“The share of care for close relatives has remained at around 15 per cent over the last ten years. The share of gifts and education has declined sharply during this period,” says a report by the Bank of Baroda.
Indians are also investing more in assets and equity instruments in foreign countries. In FY24, they invested an average of $100 million abroad every month in foreign equity and debt, up from $1.25 billion (Rs 10434 crore) in the full year of FY23, the RBI data showed.
Remittances for “maintenance of close relatives abroad” stood at $4.61 billion (Rs 38482 crore) in FY24 and for “study abroad” at $3.47 billion (Rs 28966 crore).
Overall, outward remittances under the LRS stood at $31.73 billion (Rs 2.6 lakh crore) in FY24, up from $27.14 billion (Rs 2.2 lakh crore) in the previous financial year, marking an increase of 16.91 per cent.
Five years ago, in FY19, total outward remittances under the LRS stood at $13.73 billion (Rs 1.1 lakh crore).
Under the LRS, all resident individuals, including minors, can remit up to $250,000 (roughly Rs 2.08 lakh) per year abroad without prior approval from the RBI.
Over the last 10 years, the nature of remittances abroad has changed significantly. According to the purpose of outward remittances, “gifts” accounted for the highest share in FY14, followed by “others”.
“Maintenance of close relatives and investments in equity/debt were the other major reasons. On the other hand, their share declined significantly in subsequent years,” said a report by the Bank of Baroda.
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