The Data gathered by the Reserve Bank of India reveals that Indians are found to be spending more amount of US Dollars overseas, which include tourism, shopping in other countries and bear education and health expenses of relatives. It has been recorded that the total expenditure employed by the Indians in overseas in 2018 has found to be $13 billion, which amounts to be three times higher since 2015 recorded to be $4.5 billion.
“Wealthy individuals are looking at sending their children overseas for studies. It also means that the Indian household is not parking their savings back home and are looking for avenues abroad,’’ said SK Ghosh, chief economist at State Bank of India.
In February 2004, the Indian government launched the Liberalised Remittance Scheme (LRS) expanding the amount to be sent overseas for up to $1 million per year, instead of $250,000 per year which was recorded for select current and capital account transactions like shopping, investments in stocks, bonds, and property abroad.
Due to the huge expenditure that was recorded in 2015 to be an average of $200-300 million a month, but with the implementation of this scheme, RBI allowed travel related outflows and education funding expenses as well.
This implementation gave a sharp rise to the overseas outflows for travel and education funding, which mainly account for 50% of the outflows under this scheme.
The major reason for the rise in overseas outflows for education was the lack of scholarships or the reduced amount for it.
Also, Indians have found to be investing more into the US and UK companies with fast potential growth and better opportunities found more than India.
“Besides, sponsoring children’s education and spending on travel, with the weakening of the (local) currency against the dollar and lack of clarity on the economic outlook, many HNIs are looking at investment opportunities abroad,” said Moin Ladha, a partner at law firm Khaitan and Company.
With the implementation of the scheme, it was found that with its benefits, many misuse cases have also been filed, which led to strict monitoring through RBI.