Basics
- Liberalised Remittance Scheme (LRS):
- RBI scheme allowing Indian residents to remit up to USD 250,000 per financial year abroad for permissible current/capital account transactions (education, travel, medical, investments).
- Introduced in 2004; liberalised over time.
- Trend (Jan–Jun 2025):
- Outward remittances for foreign studies = USD 11.6 billion.
- Decline = 22% lower than same period in 2024.
- Lowest in 7 years.
- Spending on education abroad forms a large share of total LRS transfers, especially in first half of year (admission season).
Relevance : GS II (Governance – Education Policy, NEP 2020, Internationalization of Education) + GS III (Economy – Forex, LRS, Higher Education as Infrastructure) + GS II/III (International Relations – Mobility & Migration Policies).
Reasons for Decline
- US Visa Troubles & Policy Tightening:
- Delays, stricter eligibility, and new restrictions on “duration of status” for international students.
- Rising political sensitivity around immigration in the US (precedent: Harvard-Trump legal tussle).
- Rising Entry Barriers in Other Countries:
- Canada: Proof of funds requirement more than doubled to CAD 22,895.
- Australia: Higher IELTS thresholds for English proficiency.
- UK: Tightening admission norms and visa regulations.
- High Costs & Domestic Alternatives:
- Inflation and rising cost of living abroad.
- Strengthening of Indian higher education institutions under NEP 2020, attracting students to stay in India.
- Shift in Destination Choices:
- From US-dominated preference to alternative geographies like Germany and other European countries.
- But transition still limited by language and structural constraints.
Economic & Social Impact
- Banking & Financial Sector:
- Education loan disbursements impacted.
- June 2025: Indian banks’ outstanding education loans = up 14% YoY, but slower than last year’s 27% growth.
- Reduced overseas remittances → lower forex outflow.
- Families & Aspirants:
- Students face higher financial burden (proof of funds, visa costs).
- Anxiety due to policy unpredictability in host countries.
- Push for local or alternative destinations with lower barriers.
- Education Ecosystem:
- Demand for quality Indian institutions may rise.
- Private universities, tie-ups with foreign institutions in India may see growth.
Geopolitical & Policy Dimensions
- Global Trends:
- US, UK, Canada, Australia increasingly adopting restrictive immigration policies.
- Rising populism and job protection politics influencing student visa policies.
- India’s Position:
- Need to strengthen domestic higher education (NEP 2020, international campuses in India, collaborations).
- Encourage Indian universities to offer globally accredited degrees to reduce outflow.
Way Forward
- Policy Measures:
- Expand scholarships, credit support for students studying abroad.
- Attract global campuses (as proposed under NEP 2020, e.g., IIT campuses abroad and foreign universities in India).
- Invest in domestic quality institutions to make India an education hub.
- Strategic Approach:
- Monitor foreign policy developments affecting student visas.
- Negotiate bilateral agreements to secure education pathways.
- Promote alternative destinations (Germany, East Asia, Middle East) with lower costs and friendlier visa norms.
