Indians have sent more money abroad in the first nine months of the current fiscal compared to the whole of FY21. Thanks to pick up in overseas education and pent-up travel demand, outward remittances, under the Liberalised Remittance Scheme (LRS), touched $13.80 billion during April-December 2021, exceeding $12.68 billion in remittances made for whole of FY21.

Under LRS, a resident individual can remit up to $250,000 in a financial year for current account transactions such as private visit, gift or donation, overseas employment expenses, emigration, maintenance of close relatives abroad, business trip, medical treatment abroad, and overseas educational expenses.

Outward remittances of Indians have grown more than ten times in the last six years. From a mere $1.33 billion in FY15, outward remittances under the LRS peaked at $18.76 billion in FY20. With the Covid-19 pandemic and the consequent curbs impacting international travel and overseas education plans, remittances dropped to $12.68 billion in FY21. According to RBI data, outward remittances for education accounted for 32 per cent of the total during April-December 2021 at $4.40 billion.

This was higher than $3.83 billion that Indians spent on overseas education in FY21 and close to even pre-Covid levels of $4.99 billion spent in FY20.

‘Exponential growth’

“The year 2021 has seen a very strong bounce back from the Covid-induced disruption in terms of larger number of students going abroad and hence higher remittances. With borders opening up and countries welcoming international students, the study abroad segment has seen an exponential growth in the past year,” said Vaibhav Singh, Co-founder, Leap Scholar.

South Asia’s largest study abroad platform, Leap Scholar, says it has helped over 60,000 students move overseas for education and facilitated more than $150 million worth of education loans in 2021. “With aspirations for global education and careers being higher than ever, we expect this pent-up demand to continue and 2022 will see new highs in the study abroad space,” Singh added.

With $4.16 billion in spending, ‘travel’ was the second highest purpose of outward remittance followed by ‘maintenance of close relatives’, under which Indians sent $2.31 billion during the first three quarters of the current fiscal.

Although smaller in size, remittances for investment in overseas equity and debt have exceeded even the pre-Covid levels. Indians sent $508 million for overseas investment during April-December 2021 as against $472 million and $431 million for the whole of FY21 and FY20 respectively.

“There has been a healthy growth of LRS investments over the last few years. The trend was triggered in 2019, when US tech stocks were on a bull run. But it has sustained even beyond that. While desire for higher returns was the key motivator initially, the reasons now are more long term in nature,” said Asheesh Chanda, Founder & CEO of global digital private wealth platform, Kristal.AI. Chanda said the need for higher alpha, saving for kids’ education and investing for seeking immigration abroad are the strong drivers for global investing.

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