Expenditure on travel abroad for education and leisure up by 60%: RBI

There was a total outflow of US$1.5 billion in May, an increase of 60% year-on-year

Expenditure on travel abroad for education and leisure up by 60%: RBI

The love for travel and need for better education has increased overseas spends by Indians, as per new data by RBI. With a rise in disposable income, Indians are exploring the world and providing better educational opportunities to their children. This has resulted in increased spending of 60% year-on-year as on May 2019. Summer vacations and just the beginning of new academic sessions could have played a major role in this upward trend.


There was a total outflow of US$1.5 billion under the Liberalised Remittances Scheme (LRS) in May. Out of this, travel was a major chunk as it rose 56% to US$568 million. The next biggest spending was on education, which rose 88% to US$334 million. Third was the maintenance of close relatives, which rose 21% to US$300 million. These three expense heads constituted 80% of the total outflow under the LRS, revealed the central bank in its latest bulletin. 


What is Liberalised Remittance Scheme (LRS)?

As per the RBI website, under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to US $250,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. 

Further, resident individuals can also avail of foreign exchange facility for specific purposes mentioned within the limit of US$250,000 only.

The Scheme was introduced on February 4, 2004, with a limit of USD 25,000. The LRS limit has been revised in stages consistent with prevailing macro and microeconomic conditions. In case of remitter being a minor, the LRS declaration form must be countersigned by the minor’s natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc.

Related: Your Child's Foreign Education: Can You Afford It?

Expenses included

Spending on holidays abroad, education and maintenance of close relatives is included under LRS. In addition, medical expenses, gifts to friends and families, and investments are other heads that come under the US $250,000 LRS limit.

Investments include those made in overseas real estate, bank deposits, bonds and stocks.

RBI is witnessing escalating remittances since it broadened its scope of transactions allowed under LRS. It has increased manifold in the last four years. While in FY 2016, outflow of remittances was about US $4.6 billion, it touched US$13.8 billion in FY 2019.

Related: Moving abroad? Check these things before you board your flight

Factors for an increase in spending

Today, almost everyone is bitten by the travel bug. The desire to travel is supplemented by rising in disposable incomes. Additionally, travel agencies today provide consumers with low cost EMIs to fund trips. Banks too are providing unsecured personal loans and travel loans to help people fulfil their wanderlust.

Also, better educational opportunities are a major reason for this Dollar outflow. Parents are no longer relying on scholarships, but are funding the education of their kids themselves. Additionally, they also send monthly maintenance to their kids to support other living expenses.

Another trend is that of parents accompanying their children to tour universities and pick the best fit. They are also accompanying their wards, later on, to help them settle in a new environment. This could be a significant factor in the spend-surge during May as it is the period just before a new school session starts. How much does it cost to study abroad? Read here.

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