According to RBI data, money sent abroad by resident Indians crossed the $1 billion mark for the first time in 2010-11. Between April and November of the current fiscal, such outward remittances stood at $628 million or around Rs 3,000 crore, down 15 per cent over a similar period in 2010-11. The dip was mainly on account of a drop in money sent for maintenance of close relatives living abroad.

The RBI's liberalised remittance scheme currently allows residents to remit up to $2,00,000 in a financial year for various purposes, both for capital and current account transactions. From $25,000 in 2004, this limit has been increased over the years.

Investment made abroad in deposits, immovable property, equity or debt instruments are all included under the scheme. Gift, donations, money spent on travel or for medical treatment abroad, money sent for maintenance of close relatives living abroad as well as funds used for studying overseas also fall under the scheme.

Investments abroad

Of these, well over a fifth of total remittances were made for investing in equity and debt instruments abroad, both in 2010-11 and till November this fiscal. This could be due to better performance by some of the markets and because of the products or vehicles offered by portfolio/wealth management firms, for Indian investors to diversify internationally.

Investments made in these overseas instruments expanded at a compounded annual rate of 22 per cent in the last three years to $266 million in 2010-11. The same stood at $148 million for the eight months ending November 2011.

Although purchase of property rose to $66.3 million in 2010-11 after a dip in 2009-10, it is still not as popular as investing in equity or debt.

Value of gifts

Indians also seem to splurge in gifting. At $242 million in 2010-11 and $166.5 million till November 2011 of this fiscal, the value of gifts rose from 20 per cent of total outward remittances last fiscal to 25 per cent this financial year so far.

The RBI, through a notification in September 2011, allowed gifts in the form of shares, debentures or any security up to $50,000 in a financial year. This limit was earlier $25,000 a year.

Interestingly, money sent for maintenance of close relatives saw a sharp increase in 2010-11 but has declined in 2011-12 thus far. For the eight months ending November 2011, Indians sent $95 million under this category, down 46 per cent over a similar period a year ago. Improved employment numbers in countries such as the US may have resulted in Indians sending less money to their relatives abroad.

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