Why are resident Indians remitting more money abroad than ever before?
From $1 billion in 2012 to over $13 billion in 2018, higher remittances could indicate greater spending abroad as rich Indians look to diversify or the beginnings of a flight of capital.
New Delhi: Indians sent more money out of the country than ever before in July 2019 under the liberalised remittance scheme (LRS), in a development that comes even as the Narendra Modi government looks to attract foreign direct and portfolio investment.
Recent data shows that in the first four months of FY’20, resident Indians sent out a little over $5.8 billion. This is higher than the aggregate outward remittance under LRS during the five years of UPA-II (April 2009 – March 2014).
Under the LRS initiative, all resident Indian individuals, including minors, are freely allowed to transfer up to a quarter million dollars ($250,000) per financial year for any permissible current or capital account transactions.
The current account transactions can include spending money on “maintenance of close relatives” or for travel, education and medical purposes. Money can also be remitted abroad to family members as “gifts”.
Remittances can also transferred for capital account transactions, money that can be used to open a foreign currency account overseas with a bank, purchase of property and making investments in mutual funds or venture capital funds.
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TheWire.in, 16 September, 2019, https://thewire.in/economy/resident-indians-remitting-more-money-abroad