By Nantoo Banerjee
Indians are embarking on international journeys like never before. In the previous year, over 30 million Indians traveled abroad, primarily for leisure. This marks an increase of nearly 15 percent compared to 2023. Expenditure on these trips surged by 25 percent. The affluent and upper-middle-class Indians are also more frequently sending their children to study abroad, with over 1.33 million Indian students currently enrolled in foreign educational institutions. Additionally, many Indians are opting for exotic overseas locations for weddings, and inviting global celebrities to Indian wedding celebrations has become quite fashionable. For this affluent segment of society, extravagant foreign expenditures are hardly a concern. The Reserve Bank’s Liberalized Remittance Scheme permits Indian residents to remit up to $250,000 abroad annually without prior approval from the RBI. The significant depreciation of the Indian Rupee (INR) against other major currencies, such as the US Dollar, Euro, Singapore Dollar, British Pound, Swiss Franc, and Japanese Yen, has had little effect on the overseas spending habits of India’s wealthy elite.
The INR has consistently faced pressure due to large trade deficits each year and high domestic inflation. However, these issues do not appear to trouble the Indian government or the affluent class. Travel companies in India and international educational institutions are thriving as they promote their offerings. Few took India’s Vice President Jagdish Dhankar’s recent remarks, which referred to the increasing trend of Indian students studying abroad as a “disease contributing to a $6-billion forex drain,” seriously. He notably failed to acknowledge the rise in leisure travel abroad among the wealthy and other activities leading to substantial foreign exchange outflows. Perhaps he chose to avoid the ongoing controversy over the record annual foreign trips made by politicians in power, funded by national and state treasuries. Critics point out instances like Prime Minister Narendra Modi’s 84 foreign visits to 73 countries in less than 11 years, often overlooking the positive outcomes of many such trips that enhance bilateral relations and promote India to attract more foreign direct investment.
The government does not seem overly concerned about the extravagant lifestyles of India’s rich citizens as long as it can secure foreign funds to cover its increasing annual trade deficits and lavish consumption by the elite. As of September 2024, India’s external debt had escalated to $711.8 billion, with an external debt-to-GDP ratio of 19.4 percent. The US dollar comprised the majority, accounting for 53.4 percent of India’s total external debt. The short-term debt to foreign exchange reserves ratio stood at 20.3 percent by the end of June 2024. Some pro-government economists argue that India’s debt burden is significantly lighter compared to countries like the USA and Japan, overlooking the vast population of low-income citizens in India, which makes such comparisons inappropriate.
In reality, the wealthy citizens of this impoverished nation enjoy lavish lifestyles, squandering the nation’s hard-earned foreign exchange on global leisure travel, questionable foreign educational pursuits at lower-tier institutions, and extravagant weddings. The wedding of Anant Ambani and Radhika Merchant last year reportedly cost around Rs 5,000 crore (approximately US$600 million) — a figure surpassing the GDPs of nations like Micronesia, the Marshall Islands, Kiribati, and Dominica. It became one of the most extravagant weddings ever, featuring luxurious pre-wedding festivities that included a private cruise, chartered jets, and performances by renowned global stars such as Rihanna and Justin Bieber. The Ambani wedding’s total foreign exchange costs remain undisclosed but were significantly higher than other globally famous weddings, including the 1981 marriage of Princess Diana and Prince Charles, which cost around US$48 million.
Indian travel agencies are booming as they prepare to offer group trips to a range of destinations from affordable locations like Thailand, Singapore, Malaysia, Vietnam, and Bali, to pricier regions in Europe, Japan, the USA, Canada, and South America. The enticing message conveyed is: “Bag Bharo, Nikal Pado, Chalo Bindas!” One travel company markets a 13-day trip to Antarctica priced at Rs. 13.25 lakh per person. A 21-day journey through South America could cost group travelers Rs. 10.85 lakh, while a nine-day Arctic cruise to Spitsbergen might run Rs. 8.75 lakh each. It appears that some executives from Indian travel firms are clocking in 90-hour workweeks to capitalize on the burgeoning trend of international travel from India. Generally mild-mannered, affluent Indian travelers are welcomed in most countries.
The United States continues to be a top choice for Indian travelers, which also boasts the largest number of wealthy Indian expatriates. The US Mission to India has issued over one million non-immigrant visas for the second consecutive year, including a record number of visitor visas, highlighting the high demand among Indians for travel to the United States for tourism, business, and education. In the last four years, the number of visitors from India has quintupled, with more than two million Indians visiting the United States in the first eleven months of 2024 — a 26 percent rise compared to the same timeframe in 2023. Presently, over five million Indians hold non-immigrant visas to the United States, with the Mission issuing thousands more daily.
According to the World Inequality Report 2022, there are approximately 14 million individuals among India’s highly affluent elite. Yet, the rapidly expanding upper middle class could be over 20 times that number. Many of them are closely connected to the 15.85 million non-resident Indians living overseas. The increasing disposable income and growth of the middle class appear to underpin the evolving lifestyle of the nouveau riche, who are also indulging in significant spending. In the past fiscal year, they allocated $17 billion to overseas travel, highlighting a record 25 percent surge from the previous fiscal year. This trend shows no signs of abating. Despite the depreciating INR and rising foreign currency exchange rates, the lifestyle of this affluent demographic remains inspiring and largely unaffected. (IPA Service)
