Outward remittances under the Liberalised Remittance Scheme (LRS) declined for the second consecutive year in FY26 (April-December), falling 4.1 per cent to $21.37 billion from $22.28 billion a year ago. This follows a sharper 10.1 per cent contraction in FY25, after remittances had peaked at $24.8 billion in FY24.

The moderation follows a strong post-pandemic surge between FY22 and FY23, when overseas spending and investment rebounded sharply. Economists say the latest decline reflects a mix of cyclical pressures and emerging structural shifts in the composition of outward flows.

“There are economic as well as non-economic reasons for the decline,” said Prof Anil Sood of the Institute for Advanced Studies in Complex Choices (IASCC). “The growth in outward investment in financial assets is partly because returns in Indian financial markets have been relatively stagnant. Investment in property abroad is likely being driven by high-net-worth individuals shifting families or businesses to low-tax jurisdictions or places offering better living conditions. Both would qualify as structural shifts.”

Even as overall remittances declined, the composition of flows shows a decisive tilt toward asset allocation abroad. Remittances for the purchase of immovable property surged 77.2 per cent year-on-year to $0.38 billion in FY26. Investment in equity and debt instruments rose 58.6 per cent to $1.77 billion, while deposits increased 11.6 per cent.

In contrast, consumption-linked categories registered broad-based declines. Travel, the single largest component, fell 5.5 per cent to $12.38 billion. Remittances for the maintenance of close relatives declined by 5 per cent, gifts fell by 13.5 per cent, and medical treatment dropped by 34.3 per cent.

Remittances for studies abroad saw a sharp 22.3 per cent fall to $1.72 billion. Sood described this as “likely to be a cyclical decline, largely driven by sharp rupee depreciation, changes in immigration policies in some advanced economies, and employment uncertainties.” He added that immigration regimes could turn more supportive over the next couple of years as demand for skilled talent becomes clearer.

The moderation in travel outflows also points to softer discretionary spending. Analysts note that this reflects uncertainty surrounding the nature of work and professional employment in high-paying sectors.

Looking ahead, Sood expects investment-related remittances to remain resilient. “We may not see much growth in consumption-related remittances,” he said, adding that policy dynamics could influence the trajectory. “The RBI and the government may discourage outward remittances if the rupee remains under pressure or if trade performance does not improve.”

Published on February 25, 2026