The sharp jump in outward remittance of funds by individuals under the liberalised remittance scheme (LRS) continued for the third straight month and hit a new high of $457.5 million in September 2015, taking the outflow in the first six months of this financial year to $1.63 billion, which is significantly higher than the total outward remittance of $1.32 billion in the whole of financial year 2014-15.
Earlier in July and August 2015 too, the remittance stood at a high of $380 million and $408 million, respectively. According to the data released by RBI, the rise in remittance between July and September has been more than four times the average monthly remittance in the past has been driven by money remitted for maintenance of relatives abroad, for study purposes and for travel.
September witnessed an exponential jump in money remitted for travel purposes. While the total money remitted abroad for travel purposes in 2014-15 stood at $11 million, for September 2015 alone, it amounted to $98 million. The month of September also witnessed almost 9 times year-on-year rise in remittance for the purpose of maintenance of relatives abroad and a four times jump in money remitted for study abroad.
The unprecedented rise in remittances have also came under the scrutiny of the Reserve Bank of India and a senior RBI earlier told that the central bank had asked for data from the authorised dealers to better understand the reason for this emerging trend.
A banking expert said that while a part of the jump in remittance for study and maintenance of relatives can be linked to the admissions in universities in the US, UK and other countries but maintained that this sort of jump is unprecedented. He, however, said that since the amount has been significantly higher, there may be other reasons to it and the RBI needs to look into it.
A part of the jump is also being attributed to the upward revision in the limit of outward remittance for individuals by RBI under the liberalised remittance scheme from $125,000 to $250,000 in February 2015.
It is not the first time that remittance has crossed $200 million mark. The figure was breached for the first time in July. The previous high was witnessed in March 2013 when it stood at $180 million.
Under LRS, resident Indians can spend $250,000 (around Rs 1.6 crore) in a year in foreign exchange for purposes including education, investment, travel, medical treatment and maintenance of relatives among others, without seeking RBI’s permission. While the limit was reduced to $75,000 in 2013 following a sharp depreciation in the value of rupee, the RBI had later raised it to $125,000 in June 2014 after the rupee stabilised. In its monetary policy review meeting in February 2015, RBI further raised the limit and doubled it to $250,000.
Source: The Indian Express
By: Sandeep Singh