3-fold surge in spending by Indians on foreign travel

FROM $651 MN TO $2.5 BN IN A YEAR

INDIAN TRAVELLERS are splurging money abroad, much more thanbefore,accordingtothelatest Reserve Bank of India data on foreign exchange for overseas travel.

The data released Tuesday showthatindiansspent$2.56billion in foreign exchange while travelling abroad in the financial year 2016-17 — a whopping three-foldrisewhencomparedto $651.4 million in 2015-16.

Withspendingbytravellerson therise,thetotalforexremittances under the Liberalised Remittance Scheme(lrs)oftherbisurgedby 76percentto$8.17billionin201617, against $4.64 billion in the previous year. Remittances for maintenanceofcloserelativesalsorose 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 milliontilllastyear—$15.9million in 2013-14, $44.9 million in 201213 and $34.9 million in 2011-12.

“More and more Indians are travelling... and they don’t mind spendingabroad,”saidaseniorofficial 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 currencyconvertiblebondsissuedby 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 acquireandholdshares,debtinstruments or other assets outside Indiawithoutpriorapprovalofthe RBI. Under the LRS, all resident individuals,includingminors,areallowed to freely remit up to $250,000perfinancialyear(aprilmarch) for any permissible currentorcapitalaccounttransaction or a combination of both. The scheme was introduced on February 4, 2004, with a limit of $25,000.Thelrslimitwasrevised in stages consistent with prevailing macro and micro economic conditions.