Remittance by Indians abroad falls for the first time in 7 years
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The amount remitted abroad for education purposes has dropped by almost 57 per cent in two years, with data for the months of February and March 2012 yet to come. In the 10-month period of financial year 2012, the remittance stood at only $94.5 million, a steep fall from $150 mn in financial year 2010-11 and $217.8 mn in 2009-10.
It is the first time in seven years that the overall outward remittance by resident individuals is set to witness a contraction. While the outward remittance under the liberalised remittance scheme (LRS) introduced in 2004 stood at $1.16 billion in financial year 2011, in this financial year, till January, the amount stood at only $759.7 mn. So far, the remittance amount under LRS has been seeing a steep rise — from $9.6 mn in 2004 to $1.16 bn in 2010-11.
The only segment that has witnessed a jump in outward remittance is travel. The remittance for travel purposes went up from $16.2 million in 2010-11 to $28.1 million in the first ten months of financial year 2012. Even the remittance on medical expenses has come down.
The drop this financial year has primarily been because of fall in both remittance related to foreign education and money sent abroad to close relatives. There has been a significant drop in equity investments abroad too in the 10 months since April 2011.
Agencies providing education opportunities abroad say there has been a drop in the number of students going for higher education because of economic slowdown in the US and Europe and a decline in job opportunities.
"In the UK, the post-study work option that was available to students has been abolished with effect from 6th April 2012, which has lead to a significant decrease in the student numbers to the UK," said Balasubramanyam Pingali of Study Overseas Education Consultants. This has also resulted in a number of colleges shutting down.
Naveen Chopra, the promoter and director of The Chopras, that also provides education opportunities abroad, in fact, attributes the shutting down of "a number of less credible colleges that allowed students to work" as the prime reason for the falling numbers. "Also there has been a sharp decline in the number of students going to Australia because of cases of violence against several Indian students... However there is no slowdown in the number of genuine students going for higher education in good colleges."
The fact that many colleges have reduced the number of scholarships they offer is also affecting the students.
The LRS scheme introduced in 2004 allowed Indians to freely remit up to $25,000 per year and the outward remittance in 2004 stood at $9.6 mn. While it grew to $72.8 mn in 2006, it witnessed a significant jump when RBI enhanced the limit thrice (between December 2006 and September 2007). As a result, the outward remittance in calendar 2007 rose to $440 mn and then to $808 mn in financial year 09, before hitting the high of 2011.
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