Mumbai: Driven by overseas travel and studies, outbound forex remittances from the country has soared almost eight times since the Reserve Bank hiked the cap 10 times in June 2015.
It can be recalled that the Reserve Bank has been steadily increasing outward overseas remittances under the liberalised remittances scheme (LRS) facility. The latest revision was in June 2015, when it increased the quantum by 10 times to USD 2,50,000 a year.
"From a modest USD 140.7 million in June 2015, the outgo through the LRS has soared to USD 1.09 billion in September 2017 which is a growth of close to eight times," according to a report by InstaRem, a leader in digital cross-border payments in Southeast Asia.
On the other hand, the total outbound remittances soared to a record USD 4.6 billion in 2016, up from USD 1.6 billion in 2015, which is a growth of over 250 per cent, says the report quoting industry data.
This massive spurt is driven by foreign travel constituting almost a third of the total spend with a 31.43 per cent share, followed by forex expenses towards maintenance of close relatives outside that takes in 26.55 per cent share and overseas studies constituting 18.8 percent of this outbound forex expenses, says the report.
According to the World Travel & Tourism Council, the total expenditure on outbound travel from the country is projected to cross Rs 1.60 trillion by 2024. Since the new LRS, there was a massive spike in the outflow.
"Parents who have sent their wards abroad for studies are the single largest users of the LRS, using this window both to pay the fees as well as to regularly meet their living expenses," says the report.
Another growing area for outward remittances is to snap up overseas property. Indians bought property worth USD 23.5 million in the first five months of 2017-18.
For investors, the LRS has meant a chance to buy up a piece of luxe property in London or New York or Dubai. "The LRS has given Indians the freedom to put their money to work anywhere in the world. The LRS data shows a 250 per cent rise in money sent overseas between 2015 and 2016 and the upward trend continues.
"Strengthening of the rupee against several global currencies including the greenback has made investments in overseas homes more affordable than earlier."
The Singapore-based InstaRem was founded in 2014, and has operations in Singapore, Hong Kong, Australia, Canada, Lithuania, India and Malaysia and powers local payments to over 60 countries across the globe.
InstaRem has received the Reserve Bank approval to begin India-outbound money transfers and it hopes to start operations next month itself.