On Saturday afternoon (5 June), Mohandas Pai sparked an interesting discussion on Twitter on why high-net-worth individuals (HNWIs) were exiting India and moving to other countries.
Data sourced from the AfrAsia bank, focussed on HNWIs with a net worth between $1 million to $9.9 million, reveals that in 2019, 2 per cent of India’s HNWIs, roughly 7,000, emigrated from India.
This was second to China, where 16,000 HNWIs chose to leave the country, comprising 2 per cent of the HNWIs. India found itself in the top spots with Russia, Hong Kong and Turkey.
While the political systems in China, Russia, and Turkey could have led to the emigration, the growing protests in Hong Kong in 2019 against the government in Beijing may have accelerated the move-out. However, what explains the exit from India, and is it only about HNWIs?
Turns out, Indians in their early 20s are already aspiring movers. For students with graduate degrees in sciences and management, an American dream is never out of question. Young India today wants to move to the United States of America, Canada, the United Kingdom, parts of Europe, and also Australia or New Zealand.
For the ones with a strong economic background, the obvious route is a Master’s degree. Some leave immediately after their high school graduation.
For the ones who are first-generation movers or unable to find sponsors abroad, the next obvious option is to secure a student loan anywhere between Rs 20 lakh and Rs 50 lakh in India, move abroad, study, and then use the earnings in dollars to pay off a loan in rupees.
For most, this entire EMI circle does not go beyond a few years. Today, pursuing a master’s from any decent university abroad, beyond the Ivy League, has become a routine for young Indians.
The objective is quite simple. Secure a loan. Get admitted to any decent university, hustle with a side-job to manage the expenses, and land up a job with any of the big multinationals to pay off the loan, and then pursue the American dream.
However, for young professionals, the move out can come after four to six years of their graduation as well. Some opt for an executive programme in management and take the first flight, while some consistently burn the midnight oil to secure an onsite project, only to never return.
Some, working through their professional networks, move out, and if all else fails, people plan for the exit after their marriage as one of the spouses garners enough prospects in any of the above-mentioned countries.
The obvious push-and-pull factor inspires this desperate exit. India, with its surplus young labour force, is an enabler for this push. On the other hand, countries like the US, UK, Australia, New Zealand and Canada serve as greener pasture with demand for skilled labour and a young population.
A number of other factors also facilitate this push-and-pull, however. To further understand this exodus, the author interacted with over a hundred NRIs (non-resident Indians) and aspiring movers over a four-hour discussion on Clubhouse.
Firstly, it is the infrastructure and quality of living. While in recent years, many Indian cities have had a significant upgrade in local infrastructure, especially in the NCR region, Bengaluru, Chennai, Mumbai and Pune, to name a few, the overall condition across the country relative to the countries in question remains dismal.
The infrastructure problem is not restricted to roads or railways alone. The second wave of the coronavirus, unexpected and unprecedented in many ways, has shaken many.
Speaking to Swarajya, one of the overseas consultants discussed how people were now ready to spend close to $900,000 against $500,000 earlier to get through the EB-5 Visa programme to the United States. “The queries have shot up since the second wave, and clearly, people are willing to pay more as long as it ensures the quality of life abroad,” he said.
India’s biggest and oldest cities, its economic powerhouses, are also beginning to repel people. In the information technology (IT) sector, it is not uncommon for professionals to seek opportunities in second and third-tier cities with a better quality of life, even at the expense of an acceptable pay cut.
Today, Bengaluru finds itself jammed with one rainfall. Mumbai cannot handle a couple of days worth of rain without flooding. Kolkata’s rusted infrastructure does not inspire professionals to build a life in that city, especially from the science background, and the NCR region, one of the biggest economic powerhouses of India, still battles the pollution problem everywhere. In Chennai and Bengaluru, water woes are beginning to become a routine.
“What’s the point of earning millions when I have to worry about freshwater, pollution, and smog every year,” one of the speakers asked.
This is where the question of taxation also comes into play. While aspiring movers realise that taxation abroad is not going to be easy either, they see value in it. “The taxes are high in the West as well, but you are guaranteed clean water, air, and other benefits as well like healthcare and public schooling for the children,” one of the speakers commented, interacting with Swarajya.
For the HNWIs, aspiring to move, the actions of some state governments against private enterprises have been alarming.
Speaking to Swarajya, one of the speakers stated that while India will be an economic powerhouse of the world, undoubtedly, and the biggest free market, the arbitrary actions of some state governments in the recent months have led many to ponder about their future here.
The unexplained policy changes and the stagnant bureaucracy, even with the reduced corruption and other corporate reforms, makes India a relatively harder puzzle to crack for aspiring entrepreneurs.
The recent threats against the Serum Institute of India in Maharashtra and attacks on Reliance Jio’s towers in Punjab do not paint a rosy picture.
“The Centre has been accommodating when it comes to the requirements of the enterprises, curbing corruption, but they are not the only ones we have to deal with,” one of the speakers remarked.
“We do not have to be in India, necessarily, to produce, trade, or sell in India,” another aspiring mover remarked.
There is the question of the government’s well-intentioned reforms versus the street veto as well.
“Modi 1.0 has been instrumental for enterprises, and the GST (goods and services tax) has been one of the biggest success stories of our times, but the political opposition to every progressive reform creates a cloud of uncertainty,” another speaker remarked.
Citing the politically motivated protests against the government on farm laws and labour reforms, a few entrepreneurs spoke about the political showdown on the streets.
“The government is clear and honest in its objectives, but the opposition is confused and corrupt,” one entrepreneur said.
The law enforcement agencies need a free hand given any young enterprise will be frightened by the recent vandalism in the Wistron facility in Karnataka, or the post-poll violence in West Bengal, or the illegal occupation of a national highway around the capital, or extortion calls in the financial capital of the country.
While it does not reflect the picture of the entire country, it does weigh on the mind of entrepreneurs looking to take a call.
In conversation with Swarajya, one of the speakers remarked how some entrepreneurs shift the blame to socialist welfare schemes to justify their exit, labelling it a ‘lazy excuse’.
The Modi government’s ‘workable socialism’ cannot be blamed for the exodus of HNWIs. While some may believe that diverting money away from welfare schemes for the rural population to infrastructure building is the way to go forward, it’s an economic fallacy. One of the NRIs was quick to dismiss this excuse as a South Bombay problem.
In a nation like India, with more than 800 million people relying on the government for food, simply ignoring welfare schemes is a disastrous idea. For the larger interest of the economy, the building blocks must be made available to this population, as has been done with bank accounts, cylinders, water and electricity, toilets, health insurance, and so on.
The percentage of HNWIs exiting India must not be viewed in isolation as well. While 7,000 HNWIs with a net worth between $1 million and $9.9 million exiting India may look alarming to many, the growing number of HNWIs within the country must be factored in as well.
However, there is a world of aspiring movers, India’s average Joes, who do not care much for politics or policy but only for the money they can earn.
Speaking to Swarajya, many participants commented on the better economic prospects abroad, especially in terms of work culture, pay scales, the dignity of labour, and professional growth.
For most first-generation movers, a part-time job along with a master’s degree is indispensable. However, when it comes to taking up jobs for side-income, being an usher or a bartender is easier in the West than in India.
For the ones fresh out of college, the mere competitiveness of the skilled labour force enables the exit.
“In India, you complete engineering outside IITs or NITs, and your best prospect is a Rs 20,000 job in one of the big IT companies. Instead, why not secure a loan, move abroad, and start with a clean slate there. Even if you are skilled, there are not enough high-paying jobs in the country,” one NRI commented.
“Sometimes, it is only about making more money,” one of the author’s batchmates, settled in Seattle, said.
There is also the question of education. India’s inferior education system, compared to the West and plagued with reservations and a lack of research appetite, repels many academicians and scientists.
Taking a cue from China, India must also invest in a plan similar to the ‘Thousands Talent’, and begin by getting back Indian talent from the rest of the world. The incoming talent can then be installed in universities and schools to upgrade the overall education system in India.
There is a silver lining to this exodus, however. India’s young labour force is only going to increase, and therefore, an exodus to better economic pastures is logical.
There is enough skilled workforce to displace the ones who are leaving, and the ones who leave today will only add to the political and economic strength of the diaspora abroad. This holds true for the emigrating HNWIs as well.
The silver lining is reflected in the remittances data for 2020. As per the expected data from World Bank, India was the leader in terms of remittance recipients across the world, with more than $83.1 billion, though declining 0.2 per cent from 2019. India was followed by China with $59.5 billion in remittances but a 13 per cent decline.
While India, in 2019-20 and 2020-21, saw remittances in the neighbourhood of $83 billion, it has increased from $79 billion in 2018-2019, $65.3 billion in 2016-2017, and $55.6 billion in 2009-2010, and merely $12.8 billion in 2000-2001.
The devastating second wave may lead many to question their decision of staying back in India, but at the same time, India’s success story with the vaccine administration, curbing the spread of the virus in a country of 1.3 billion people, and the imminent economic revival will also initiate a trend of reverse migration for many.
Yes, Indians, both HNWIs and average Joes, are leaving for greener pastures, but it is not an alarming exodus. If the government keeps pushing for reforms despite political resistance, especially when it comes to aiding the cause of wealth and job creators, the trend could be reversed.
Indians leaving India is not a new phenomenon, but the onus now lies on the government to normalise the idea of Indians abroad leaving for India.