Indians Remitted $6 Billion Q1 Of FY23 Under LRS Scheme

Outward remittances under the Reserve Bank of India’s (RBI’s) liberalised remittance scheme (LRS) made a strong comeback in the first quarter of FY23 as Indians increased spending on international travel, maintenance of close relatives, and gifts. The latest data for Q1-FY23 released by the RBI shows that remittance by Indians under the scheme jumped 64.75 per cent to over $6.04 billion from $3.67 billion in Q1FY22. The amount remitted in Q1FY23 is even higher than that in Q4FY22, where outward remittance under LRS was to the tune of $5.8 billion.

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Sector-Wise Contributions:

International travel contributed $2.92 billion of the $6.04 billion remitted under LRS in Q1FY23, thus constituting almost 48 per cent of the money remitted under the LRS scheme. In the same period a year ago, Indians spent $856.43 million on international travel as Covid-19 restrictions around the world slowed down international travel.

Maintenance of close relatives formed the second largest segment after international travel, with Indian’s remitting just over $1 billion in Q1FY23. Money remitted under the category “gift” constituted the third largest segment, with India’s remitting around $770.66 million in Q1, as against $489.15 million in the year-ago period. Overseas education constituted the fourth largest segment, with $738.42 million remitted in the April – June quarter, against $1.16 billion in the year-ago period.

The So Far Progress Of The Scheme:

• According to the scheme introduced in 2004, all resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year 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.
• The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions. Outward remittances under LRS dipped significantly in FY21 as the pandemic-related restrictions shut down international travel for a long period of time. In FY21, under the scheme, India’s remittance was $12.68 billion, down 32.38 per cent from FY20, where remittances under LRS was $18.76 billion.

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