Outward remittances soar to a record high of US$29 billion during April 2023-February 2024

Team Finance Saathi

24/Apr/2024

Key Points:

Surging Outward Remittances: India's outward remittances hit a new high of US$ 29 billion during April 2023-February 2024, reflecting a robust 21.7% increase compared to the previous year.
Driving Factors: The surge is fueled by various factors including increased international travel, support for close relatives, and investments in overseas education, despite a slight dip attributed to reduced travel spending in February 2024.
Enduring Relevance of LRS Scheme: The Liberalised Remittance Scheme (LRS) introduced in 2004 remains a pivotal tool, allowing residents to remit up to US$ 250,000 per financial year, showcasing its enduring importance in facilitating international transactions.

In recent years, India's outward remittances have been on an upward trajectory, reaching unprecedented levels during the April 2023-February 2024 period.

According to data from the Reserve Bank of India (RBI), outbound remittances under the Liberalised Remittance Scheme (LRS) surged to a remarkable US$ 29 billion, marking a substantial 21.7% increase compared to the same period in the previous year.

The Surge and its Drivers

This surge in outward remittances is indicative of a consistent recovery post the challenges posed by the COVID-19 pandemic. Despite a decline in FY21, attributed to the global pandemic's disruptions, the fiscal year FY23 witnessed a record high of US$ 27.14 billion, signaling a resilient bounce-back. Notably, February 2024 saw a slight dip of 23% to US$ 2.01 billion compared to January 2024, mainly due to reduced international travel expenditures.

Understanding the Allocation

Delving deeper into the breakdown of outward remittances during the April-February period of FY24 reveals interesting insights. The lion's share of remittances, amounting to US$ 16 billion, was allocated towards international travel. This marks a substantial 27.91% increase from the previous year, highlighting the resurgence in travel activities post-pandemic restrictions.

Additionally, significant funds were directed towards supporting close relatives and financing overseas education, amounting to US$ 4.22 billion and US$ 3.28 billion, respectively. These allocations underscore the importance of familial support and investment in education for Indian residents, even amidst global uncertainties.

Also Read : April Sees India's Business Activity Soar to a 14-Year Peak According to PMI Data.

The Role of the LRS Scheme

Central to facilitating these outbound remittances is the Liberalised Remittance Scheme (LRS), introduced by the RBI in 2004. This scheme allows resident individuals to remit up to US$ 250,000 per financial year for permissible current or capital account transactions. Over the years, the LRS scheme has proven its enduring relevance in empowering Indian residents to engage in international transactions seamlessly.

Implications and Future Outlook

The surge in outward remittances not only reflects the resilience of the Indian economy but also has broader implications. It signifies increased global integration, as Indian residents explore opportunities abroad for travel, education, and familial support. Moreover, it highlights the growing importance of cross-border transactions in today's interconnected world.

Looking ahead, while the slight dip in February 2024 may indicate short-term fluctuations, the overall upward trajectory suggests continued growth in outward remittances. Factors such as economic recovery, evolving travel trends, and shifting educational preferences are expected to shape the future landscape of outbound remittances from India.

Conclusion

India's record outward remittances during the April 2023-February 2024 period reflect a story of resilience, recovery, and global engagement. Despite facing challenges such as the COVID-19 pandemic, Indian residents have demonstrated a remarkable propensity to invest and support endeavors beyond borders. As the world navigates through uncertainties, the enduring relevance of schemes like LRS underscores the importance of facilitating seamless international transactions, fostering greater connectivity and opportunities for Indian residents on the global stage.

Also Read : India's Defense Investment: A Global Contender at $83.6 Billion

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Outward remittances soar to a record high of US$29 billion during April 2023-February 2024

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