Why must India get worked up about declining opportunities for cash, brain drain?
August 23, 2020
It would be interesting to see how many of those who attended Modi’s rallies abroad have decided to return home to contribute to India’s “atmanirbharata”. Rather, the number of Indians seeking blessings of the Visa God is only increasing by the year, and the non-resident Indian is becoming the not-returning Indian. — Sanjaya Baru
Thanks to the COVID lockdown, the Chilkur Balaji Temple near Hyderabad remains closed. This temple gained popularity as the Visa Temple because its devotees believe prayers to the deity here for a US visa rarely go unanswered.
Though the temple is closed and prayer and offerings are not possible, Chilkur’s Balaji has shown that he can open a window even when an American President shuts the door. Though, to be sure, Balaji’s blessings have been supplemented by the combined power of America’s Ivy League institutions and information technology behemoths who have together managed to get US President Donald Trump to rescind his directive that when an American university switches to online courses, international students must go home to their country of origin and complete their education online.
That so many US universities and companies successfully protested the move should not surprise given the income that universities get from international students and the profits that US companies make from hiring imported talent. According to a US department of commerce estimate, US universities earn every year close to US$45 billion in international student fee. A UK study showed that British universities could lose anywhere up to GBP19 billion if intake of international students falls sharply. Educational institutions in many Anglophone countries, including Canada, Australia, New Zealand and Singapore, have become increasingly dependent on tuition fee earned from foreign students and Indians are becoming the single largest group among them.
Look at this, however, from an Indian viewpoint. Studies show that Indian students remit anywhere between $10 to $13 billion annually as tuition fee abroad. The Reserve Bank of India provides data under its Liberalised Remittance Scheme (LRS) on foreign exchange remitted overseas by Indian nationals resident in India. The annual average forex outflow has risen from $1.07 bn in 2009-14 to $11.33 in 2014-20. Two items — payment for studies abroad and for maintenance of close relatives — together accounted for an average of around 30 per cent of total outward remittances in 2009-2014, rising to 47 per cent in 2014-20. Indians are taking more money out of India to educate and maintain themselves abroad.
H1-B visa holders, who go abroad as workers, do remit a substantial part of their income earned abroad, especially if the family is still in India. Students who pay their way and go in search of paid education and eventual citizenship abroad are a net drain on the economy, unless they return and contribute to national development. An entire industry has emerged in India to help students migrate, with as many as a 176 “world schools” offering International Baccalaureate (IB) certificates that help qualify school-leaving Indian children for graduate education abroad.
The fee charged by IB world schools can range from around Rs 75,000 per month to Rs 1,50,000 a month. Many of them employ experienced, elderly British and European teachers retired from institutions in their countries. There is, however, no systematic effort at either encouraging these students to return home or pay a “brain drain tax” like the one suggested in the early 1970s by economist Jagdish Bhagwati.
In the 1970s, 1980s and even into the 1990s, most Indian migrants to developed countries came from middle class, mainly upper caste, families. However, over the past couple of decades, out-migrants have come from all classes. The demand for a US visa, for access to educational and employment opportunities in the English-speaking developed world comes as much from the middle class as it does from upper class families. Children of business leaders, politicians, government officials, diplomats and just about every influential section of society are seeking exit visas.
The next generation of the Indian elite is increasingly domiciled overseas. A survey has shown that online education offered by western institutions has little appeal for Indian students because those who travel West for education also hope to eventually emigrate.
The out-migration of educated and skilled Indians that is not balanced by a return flow of income, knowledge, investment and talent, constitutes both a drain of cash and of brain power. The policy elite in the developing world, from where talent has been migrating out to the developed world, has consistently ignored Bhagwati’s brain drain tax proposal. Both Prime Ministers Manmohan Singh and Narendra Modi have referred to overseas Indians as a “Brain Bank” on whom India can draw for its own development. However, the fact is that this so-called Brain Bank has in fact been making huge financial and intellectual deposits into the host country, increasing the drain without appreciable returns for the home country.
It is largely the workers in the Gulf region and some H1-B workers in the US who remit any money home. Well-off Indians in the developed Anglophone world settle down there and make all their investments — financial, intellectual and emotional — in their host country. Why the Indian government and media get all worked up about declining opportunities for Indian out-migration has never been clear to me. India has made the out-migration of skills a matter of great national interest, seeking a favourable multilateral trade regime for what is referred to in the language of trade diplomacy as the “movement of natural persons”.
In the early 2000s, when India’s rise was viewed in a positive light, many had hoped that like the East Asian communities in the US – Japanese, Koreans and Chinese – Indians in the US would also return home, invest in India and contribute to the home country’s development. However, for a variety of reasons, this expectation is yet to be realised. Overseas Indians are quite happy to chant the “Modi-Modi” mantra in New York, London, Houston and around the world, many may even contribute financially to the Modi campaign, organise webinars and talk India up. It would be interesting to see how many of those who attended Modi’s rallies abroad have decided to return home to contribute to India’s “atmanirbharata”. In the past, rather the number of Indians seeking blessings of the Visa God has only been increasing by the year, and the non-resident Indian is becoming the not-returning Indian.
This article first appeared in the print edition on July 17 under the title “Blessings of the visa gods.” The writer is a policy analyst and former media advisor to Prime Minister of India.