Individuals travelling abroad may soon be allowed to spend $2,00,000 (2 lakh) overseas in a year as against the current ceiling of $75,000, according to a Finance Ministry official.
“The RBI (Reserve Bank of India) may eventually reverse all measure taken to contain CAD and currency fluctuation in July-August last year,” the official said.
The apex bank could raise the limit sometime this year based on its assessment of the external sector, the official said.
As part of restrictions imposed in August last year to contain burgeoning current account deficit, the RBI had lowered the outward remittance limit to $75,000 in a financial year for any permitted current or capital account transaction or a combination of both.
The current account deficit had touched a record high of $88.2 billion, or 4.8 per cent of GDP, in 2012-13. It, however, is estimated to have come down to below $32 billion, or 1.7 per cent of GDP, in 2013-14.
The rupee has strengthened to sub-59 level against dollar from a high of nearly 68.85 in August 2013.
This remittance limit was allowed under the condition that the fund should not be used for acquisition of immovable property, directly or indirectly, outside India.
Resident individuals were allowed to use this limit for setting up joint ventures (JV) or wholly-owned subsidiaries outside India.
Last week, the Reserve Bank had eased gold import norms by allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.
The apex bank had tied imports with exports and prescribed an ’80:20′ formula. This facility was available to select banks only and other entities were barred from importing the metal.
The RBI in July last year had imposed severe restrictions on gold imports in order to check burgeoning current account deficit and sliding rupee.