Indians are spending a record amount of foreign exchange on international travel. In June 2019 alone, the spending on foreign travel as per the Reserve Bank of India amounted to $596 million – the highest since RBI is collecting data under the liberalised remittance scheme. As the overall forex spending by Indians is on the rise, expenditure done by them on international trips is increasing even faster, denoting their rise in interest of travelling abroad.
In June, this year the travel spends done by Indians surged and accounted for 42% of the foreign exchange purchased. In the first quarter of FY19, the international travel summed $1,594 million of the total $4,181 million in forex purchased.
The Reserve Bank of India categorises retail purchase of foreign currency under various heads, such as the purchase of property, travel, gifts, education, investments, and maintenance of close relatives. The second-highest recorded category has been education.
In 2004, RBI introduced the liberalised remittance scheme, which allowed Indians to spend up to $25,000 annually. This limit was revised to $250,000 per individual and now except for the purposes of gambling and investing in Indian convertible bonds, the money can be used for any purpose.
In June 2018, the stats of foreign currency spend under the head Foreign Travel stood at $381 million out of a total spend of $1 billion, accounting for 37%. Followed by Education at 25% while the share of education has remained constant, it was because of the partial restriction on work visas in the US and the UK that travel has grown sharply.
According to the WTO – World Tourism Organization, the number of Indians travelling overseas in 2019 will hit 5 crores, which is nearly twice the 2.4 crores Indian travellers who flew in 2017.
The FY19 data shared by RBI shows that out of the $13.8 billion spent by Indians, $4.8 billion (35%) was on travel, followed by $3.6 billion (26%) on education and $2.8 billion (20%) for maintenance of close relatives. Apart from this Indians also spent nearly $1.4 billion on gifts to their relatives overseas.
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