The World Tourism Organization revealed that Indians are spending a record amount on international travel.
As per June 2019, spending on foreign travel amounted to $596 million, the highest since the Reserve Bank of India (RBI) started collating data under the liberalized remittance scheme. While overall forex (foreign exchange) spending by Indians is on the rise, expenditure on foreign trips is growing even faster, accounting for a larger share of the total spend.
This year’s June travel spend accounted for 42 percent of the foreign purchased by Indian individuals. In the first quarter of FY19, international travel cost the country $1,594 million of the total $4,181 million in forex purchased by individuals between April and June 2019. A year ago in April-June 2018, travel was $1 billion out of a total spend of $3 billion.
The RBI categorizes retail purchase of dollars under various heads, such as travel, education, purchase of property, gifts, investments, and maintenance of close relatives. The second-highest category has been education.
RBI’s numbers show that of the total $13.8 billion spent by Indians in Financial Year 2019, $4.8 billion (35 percent) was on travel, $3.6 billion (26 percent) on education, followed by $2.8 billion (20 percent) for maintenance of close relatives and nearly $1.4 billion on gifts to the relatives overseas.
The liberalized remittance scheme was introduced in 2004, allowing Indians to spend up to $25,000 annually at that time. This limit was periodically revised and now stands at $2,50,000 per individual. Except for gambling and investing in Indian convertible bonds, the money can be used for any purpose.
A year ago, for June 2018, foreign travel was $381 million out of a total spend of $1 billion, accounting for 37% percent This was followed by education at 25 percent. While the share of education has remained constant, thanks partially to the restriction on work visas in the United States and the United Kingdom, travel has grown sharply on the back of a steady rupee.
According to the World Tourism Organization, by the end of 2019, the number of Indians traveling overseas will hit 5 crores, which is near twice the 2.4 crores who had traveled overseas in 2017. Although this is less than 4 percent of the country’s population, it is big in terms of spends.
In FY19, Indians expended only $84 million on the purchase of property abroad. These numbers are solely transactions done in an individual capacity and do not consider investments by high net worth individuals through a corporate route.
By Sowmya Sangam