Funds sent abroad by students under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) declined by over 42 per cent to $2.57 billion during the nine months ended December 2022 of the current fiscal (2022-23) as against $ 4.4 billion in the same period of 2021. Under the LRS, a resident can take out foreign exchange up to $250,000 annually for various purposes like travel, gift, studies abroad, maintenance of relatives, purchase of property, medical treatment and donations. However, overall remittances by resident individuals under LRS have shot up by 40 per cent to $19.35 billion during the nine months ended December 2022 from $13.79 billion a year ago. Remittances in 2022-23 are expected to exceed $19.61 billion registered in fiscal 2021-22. According to experts, the fall in outward student remittances is due to difficulty getting visas and uncertainty over job scenarios amid the slowdown in major developed economies triggered by rising inflation and interest rates. “The fall (in remittances by students) is due to a couple of factors - one, there is a delay in getting Visas as normally students go to the US. Second, the willingness to go abroad also depends on the overall employment situation. There is an impression now that if I go out for studies, there is no assurance of a job I can continue with. This could be keeping a few people away from going for higher studies in the US,” Bank of Baroda Chief Economist Madan Sabnavis said. He said that the rising cost of education due to the falling rupee also makes it difficult for students to pursue higher studies. Between April and December, the rupee depreciated by over 10 per cent against the US dollar. On the other hand, the cost of living in countries like the US and the UK has shot up in the last year. Among other countries, students from India also go to Russia and Ukraine for studies. After the Russia-Ukraine war, students are not going to these countries, said a banker. Student remittances declined to $ 667 million during the quarter ended December 2022 as against $ 1.16 billion in the same period a year ago. According to RBI data, investment in overseas equity and debt by resident individuals shot up by 90 per cent to $ 317.57 million during the quarter ended December 2022 from $ 167.18 billion during the same period a year ago. US and other overseas stock markets stabilised after the turmoil triggered by the Russia-Ukraine war in early 2022 sent stocks tumbling. Total equity and debt investment by Indians abroad were $ 746.5 million in fiscal 2021-22. On the other hand, the biggest jump in remittances was in overseas travel by Indians who took out $ 9.94 billion during the nine months ended December 2022 as air travel opened up after the pandemic. Travel remittances were $ 6.90 billion during the previous fiscal 2020-21.
