Footloose Indians are splurging abroad.
In January 2018, monthly outbound remittances by Indian residents touched a record high of $1.2 billion (over Rs7,700 crore), according to the Reserve Bank of India (RBI). In the first 10 months of this financial year (the latest data available), Indians have already spent $8.17 billion, significantly higher than the $4.6 billion they spent in the same period a year ago.
According to RBI regulations, an Indian citizen is allowed to spend up to $250,000 outside the country in a year. This includes investments, medical expenses, spending on education, the purchase of immovable property, gifts, and donations.
“We are seeing Indians doing multiple international trips and holidays per year and, therefore, travel is the leading reason for increase in outward remittances,” said Bhavik Vasa, chief growth officer of EbixCash, a financial services company that offers remittance services. ”Education and student remittances are also rising, followed by medical expenses and events, and weddings at international destinations have also risen.”
Over the years, the central bank and the Indian government have added more avenues for Indians to spend abroad, such as the maintenance of close relatives and investments in equity and debt. All this has only made foreign fund transfers easier.
The rupee has also strengthened slightly against the dollar over the past year, reversing the fall against the dollar in the last six consecutive years. This has added to Indians’ purchasing power. However, the Indian currency is expected to weaken slightly again in 2018, which may dampen foreign spending.
Meanwhile, outbound remittances remain a fraction of the amount non-resident Indians send home. In financial year 2017, India, the world’s top inward remittance market, received $61.29 billion, more than seven times what its citizens spent abroad.