WITH ADMISSIONS to foreign universities back in favour after a year-long lull, along with steady normalisation in foreign travel and rise in economic activity, monthly outward remittances under the Liberalised Remittance Scheme (LRS) hit an all-time high of $1.96 billion in August, according to data released by the Reserve Bank of India.
The previous high was $1.87 billion in August 2019. This August, the data show, remittances on account of “study abroad” also amounted to an all-time monthly high of $780 million.
Remittances for travel, too, hit a 18-month high of $574 million — the highest since February 2020, when several countries started imposing flight and travel restrictions following the Covid outbreak. This August also witnessed remittances of $284.8 million for the purpose of “maintenance” of close relatives in August 2021.
Experts say that traditionally August witnesses high outward remittance as universities overseas start their new session in September and students remit funds for fee, accomodation, tickets and other set-up costs.
Arijit Sanyal, MD and CEO, HDFC Credila Financial Services, said the organisation saw a big rise in disbursements during the month. “Last year, the demand had gone down because of Covid lockdowns. So this year there has been a bunching-up of demand, which has led to the rise. Also, there are new geographies that students are going to and that has led to a higher number of students going out,” he said.
According to Sanyal, while the US continues to get the major share of students, Canada and the UK have become bigger markets and there are “many other new places where more and more students are going for education”.
Experts say more Indian students have been able to obtain admissions overseas because of two factors: several universities have added capacity following the evolution of a hybrid mode of education delivery and Indian students have increased their share because of their competitiveness.
Experts in education consulting business say that between March and August last year, there was uncertainty around how long Covid would persist with no breakthrough on vaccinations.
“As a result, many students did not take admissions in foreign universities. This year, the numbers have grown significantly as there is much more clarity on vaccinations and the protection it offers,” said a senior official with a leading overseas education consultant in Hyderabad.
“The number of students going abroad is growing every year and the trend remains constant except for a blip last year on account of Covid,” the official said.
With the record outward remittances in August, the total in the first five months of the current financial year has now reached $6.94 billion. In comparison, remittances in the corresponding five-month period of last financial year, which was hit hard by Covid, amounted to $4.05 billion. For the full year FY’21, it amounted to $12.68 billion.
The year 2019-20 had witnessed the highest outward remittances of $18.76 billion in any financial year since LRS was introduced in 2004.
India has witnessed a sharp surge in remittances over the last seven years. While outward remittances under LRS amounted to $1.325 billion in the financial year 2014-15, it jumped to 4.6 billion in 2015-16 and over the next few years rose to $18.76 billion in 2019-20.
Aggregate outward remittances under LRS since April 2014 amounted to $77.6 billion. While nearly $20 billion have been remitted for “study abroad”, over $24 billion have been remitted for travel purposes.
Under the LRS, resident individuals are allowed to remit up to $250,000 in a financial year under various heads, including current account transactions such as going overseas on employment, studies, travel, emigration, maintenance of close relatives, and medical treatment.
Residents can also transfer money for capital account transactions under LRS, including opening of foreign currency bank accounts overseas, purchase of property and making investments in units of mutual funds, and venture capital funds.