$1 billion was sent overseas for students through the Liberalized Remittances Scheme

By Radhika Retnam

The figures released by the RBI shows that outward remittances under the Liberalised Remittances Scheme (LRS) have surged by close to 200 per in fiscal 2015-16cent.Remittances for students studying abroad have hit a record high of $1 billion in the last nine months. The prime reason for this is being LRS allowing Indian residents to acquire and hold shares, debt instruments or other assets outside India without prior approval of the RBI. They can take out a maximum of $250,000 per individual annually. The monthly remittances in 2015-16 have exceeded the full fiscal outflow of $440 million in the year 2007-08.

According to RBI figures, Indian residents have sent $3.81 billion out of the country in the first 11 months of fiscal 2015-16, which is 187 per cent more than $1.32 billion outward remittances in 2014-15. On an average, remittances now amount to over $400 million every month. The full fiscal outflow is expected to cross $4 billion or perhaps around Rs 26,000 crore.The LRS allows Indian residents to acquire and hold shares, debt instruments or other assets outside India without prior approval of the RBI. They can take out a maximum of $250,000 per individual annually.According to the RBI, remittances under the head ‘maintenance of close relatives’ and ‘studies abroad’ have risen sharply in the last nine months. While student remittances were a meagre $10.1 million in April, the outflow touched a high of $213 million in January. Student remittances had touched $1 billion in the last eight-nine months. It is estimated that close to three lakh Indian students go abroad every year for studies, with the US remaining the preferred destination.

According to the RBI, remittances under the head ‘maintenance of close relatives’ and ‘studies abroad’ have risen sharply in the last nine months. While student remittances were a meager $10.1 million in April, the outflow touched a high of $213 million in January. Student remittances had touched $1 billion in the last eight-nine months. It is estimated that close to three lakh Indian students go abroad every year for studies, with the US remaining the preferred destination.

One of the many reasons for an increase in outward remittances is definitely because more and more students are going abroad to pursue higher education and relatives maintaining them overseas by sending money. The government’s move to raise the permissible limit on outward remittances from $125,000 to $250,000 (with further allowances for education and medical expenses) has additionally allowed people to remit outward more through the organized channels for that purpose.

India’s foreign exchange reserves hit a record level of $359.91 billion as on April 8, data from the Reserve Bank shows.

With a rise in foreign exchange reserves, the government and the central bank has also allowed people to start investing outside for business and other purposes. This increase in outward remittances cab be attributed to blue collared workers in India who send money home – to Nepal and Bangladesh. The RBI had in August 2013 reduced the ceiling from $200,000 to $75,000 per person in a year under the LRS because of a wide current account deficit and a volatile rupee.Later, after an improvement in macro-economic indicators, the ceiling was raised to $1,25,000 in June 2014. With foreign exchange reserves touching record levels, the RBI doubled the annual overseas investment ceiling for individuals to $2,50,000 in February 2015.

However, the RBI is comfortably placed to meet all foreign exchange requirements. With a rise in foreign exchange reserves, the government and the central bank has also allowed people to start investing outside for business and other purposes.


About The Author

Radhika RatnamRadhika Retnam

Radhika Retnam is currently pursuing Post-graduation in Journalism at the Press club Institute in Trivandrum. She is an active volunteer at MAD ( Make a Difference), an NGO that takes care of the education and overall growth of kids at Shelter homes. She is an occasional creative writer and has published poems in ‘Kavya Bharathi’ (a journal published by The American College, Madras). She has also won the challenge memorial award for poetry in 2012. She is planning to conduct an exhibition of her abstract paintings later this year. She is also a researcher for a project on media studies conducted in collaboration with ICSSR and JNU.