Individuals' spending limit abroad may be hiked to USD 2 lakh

New Delhi: Giving more freedom to individuals travelling abroad, they may soon be allowed to  spend USD 2 lakh overseas in a year as against the present  ceiling of USD 75,000.  "The RBI may eventually reverse all measure taken to contain CAD and currency fluctuation in July-August last  year," said a Finance Ministry official. 

The central 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 (CAD), the Reserve  Bank had lowered the outward remittance limit to USD 75,000 in  a financial year for any permitted current or capital account  transaction or a combination of both.  The CAD had touched a record high of USD 88.2 billion or 4.8 per cent of GDP in 2012-13. It, however, is estimated to have come down to below USD 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 of India (RBI) 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 central bank had tied imports with exports and  prescribed a 20:80 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.