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INDIAN TRAVELLERS are splurging money abroad, much more than before, according to the latest Reserve Bank of India data on foreign exchange for overseas travel. The data released Tuesday show that Indians spent $2.56 billion in foreign exchange while travelling abroad in the financial year 2016-17 — a whopping three-fold rise when compared to $651.4 million in 2015-16.
With spending by travellers on the rise, the total forex remittances under the Liberalised Remittance Scheme (LRS) of the RBI surged by 76 per cent to $8.17 billion in 2016-17, against $4.64 billion in the previous year. Remittances for maintenance of close relatives also rose to $2.169 billion from $1.37 billion in the previous year. Also, remittances for Indian students abroad increased to $1.536 billion from $1.20 billion in 2015-16, RBI data show. According to the RBI, forex release for travel was below $100 million till last year — $15.9 million in 2013-14, $44.9 million in 2012-13 and $34.9 million in 2011-12.
“More and more Indians are travelling… and they don’t mind spending abroad,” said a senior official with a nationalised bank.
Deposits of Indians abroad, too, more than doubled to $283.8 million in 2016-17 from $109.9 million last year. Indian investments in overseas equity and debt also increased to $443.6 million from $317.9 million. However, the RBI has banned remittances from India for margins or margin calls to overseas exchanges or overseas counterparty, the purchase of foreign currency convertible bonds issued by Indian companies in the overseas secondary market and trading in foreign exchange abroad.
The RBI has been increasing the limit for remittances following the rise in foreign exchange reserves. In February 2015, with foreign exchange reserves touching record levels, RBI doubled the annual overseas investment ceiling for individuals to $250,000 under the LRS.
In the wake of the worsening current account deficit and a volatile rupee, the RBI had in August 2013 reduced the ceiling from $200,000 to $75,000 per person in a year under the LRS.
Consequently, with improvement in the forex situation, it was raised to $1,25,000 in June 2014. The LRS allows residents to acquire and hold shares, debt instruments or other assets outside India without prior approval of the RBI. Under the LRS, all resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year (April-March) 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 was revised in stages consistent with prevailing macro and micro economic conditions.