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Exchange rates are still incredible and a lot of foreigners do this in India. In places like Goa, HP, UK etc.

> but once you arrived in India you could live off the very generous UK Unemployment Benefit for a very long time

Oh, so your friend is the reason the extremely generous £391/mo unemployment benefit stops if you leave the country even for one day now ! :)

He just collected unemployment while vacationing for months? Was that fraud or just how the system worked?

There were almost no checks - he was, in theory, 'available for work'. The system is very different now - in part because it used to be too easy to take advantage of . . .