Indians Spending on Overseas Travel, Education Sees Record Surge: RBI DataJuly 16, 2019 11:53
A data revealed by the Reserve Bank of India (RBI) shows that Indians are spending more on overseas travel and education. The spends rose more than 60 percent year on year this May just ahead of the next academic season.
Expenses on overseas travel under the Liberalized Remittances Scheme(LRS) rose 56 percent to $568 million in May year-on-year, while spends on education and maintenance of close relatives rose 88 percent to $334 million and 21 percent to $ 300 million, respectively, according to the latest figures released by the RBI in its monthly bulletin showed.
These three outgo heads accounted for 80 percent of $1.5-billion outflows under the LRS. Under this scheme, resident Indians are permitted to spend up to $250,000 a year overseas for a certain permissible current account and capital account expenditure.
These include spends on travel abroad, education, maintenance of close relatives as well as gifts to family and friends overseas and medical expenses. Also, certain capital account expenses like investments in overseas stock, properties, bonds, and deposits are also included in this limit.
Remittances under LRS have been soaring over the past five years ever since the Reserve Bank of India broadened the scope by including several transactions under overseas travel and education expenses. From $4.6 billion in FY16, outward remittances under LRS rose to $13.8 billion in FY19.
According to travel industry experts, Indians are spending more on foreign travel than before. Not only has their disposable income going up, travel agencies now offer flexible payments options and banks are also offering unsecured personal loans for travel and tourism.
Another trend that is picking up these days is university tours by families of prospective students going overseas for undergraduate studies.
Overseas education, of late, has turned out to be a major source of dollar outflow. Ever since the tech bubble burst in the early 2000s, universities in North America have cut down on offers of scholarships and fellowships. As a consequence, self-funding of overseas education is rising, bankers point out.
Self-funding of education has also resulted in a rise in outgo for maintenance of close relatives. Parents also send money for the regular expenses of their children studying overseas.
Though the amount of outflows under LRS is still not very significant, at a time when the country’s import bill is under pressure, higher outflows could put pressure on the current account in the balance of payments.
By Sowmya Sangam