In just seven months, Indians have spent more money on overseas travel than in any of the previous fiscal years. According to latest RBI data, Indians have sent $7.78 billion in travel remittance between April and October under the Liberalised Remittance Scheme (LRS).
The remittance in the first seven months of the current fiscal have even exceeded the pre-Covid high of $6.96 billion recorded in FY20 and more than doubled the FY21 remittance of $3.24 billion. However, FY21, was an aberration since international travel came to a near halt in the year due to the Covid-19 pandemic and widespread travel bans imposed by countries across the world.
Under LRS, all resident individuals, including minors, are allowed to remit up to $250,000 per financial year for any permissible current or capital account transaction or a combination of both. Remittances are allowed for purposes such as overseas education, international travel, maintenance of close relatives, medical treatment, purchase of immovable properties and investment in equity/debt, gift or donation among others.
Ever since the unlocking of borders and resumption of international flight services, Indians have been flocking to more and more overseas destinations in search of new getaways. Consequently, the total outward remittances under the LRS route hit an all time high of $19.61 billion in FY22, primarily driven by travel and overseas education.
Pent up travel demand
In the current fiscal, the total outward remittance between April-October stood at $15.29 billion, of which travel remittance accounted for 51 per cent, at $7.78 billion, followed by remittance for maintenance of close relatives ($2.30 billion) and overseas education ($2.12 billion).
Sudarshan Motwani, Founder & CEO of BookMyForex.com said that the foreign currency exchange and international money transfer firm has seen a multi-fold increase in demand for forex as compared to Covid times.
“People have been starved of foreign travel and with Covid restrictions out of the way, we have seen a sudden surge in travel. There’s a similar increase in remittances for tuition fees with the surge in student visas,” he added.
Motwani noted that many more people are going on holidays to Vietnam, Indonesia, Dubai, and Thailand rather than to Europe, the US, and Australia mainly due to Visa related delays.