Source: www.asiaecon.org |

Homeward Bound for India's Diaspora

India has suffered a net brain drain over the past three decades as many of its best and most skilled professionals moved to countries that provide better opportunities. The result has been economically devastating. However, with India’s rapidly growing economy we may see a return of India’s diaspora, made up…

India has suffered a net brain drain over the past three decades as many of its best and most skilled professionals moved to countries that provide better opportunities. The result has been economically devastating. However, with India’s rapidly growing economy we may see a return of India’s diaspora, made up of 25 million people, back to their homeland, resulting in what is called a “brain gain.” As a report by AeA, an American trade body, aptly titled a report “America’s brain drain will be India’s brain gain” - that time is near. Recent literature on diasporas has been focused on remittances, which India has been the largest beneficiary. However, such a focus on financial inflows does not consider the negative effect of human capital outflows. The focus should be on the impact of the return of high skilled workers and implementation of policies that will attract more Indians to return home.

Impact of a Reverse Brain Drain

In recent years, India’s brain drain has resulted in the US’ brain gain. The US alone received a total of 42,046 Indians in 2000, 26,232 of which became nationalized citizens – most of whom were skilled professionals and entrepreneurs. Additionally, Jagdish Bhagwati, a world renowned trade economist and Professor at Columbia University, argues that Indians immigrate during their most productive years. According to the United Nations Human Development Report in 2000, brain drain represents a $2 billion annual loss to India.

A reversal of the brain drain that began in the 1970s would have a huge beneficial impact on the economy as the Non Resident Indians (NRIs) of today are bona fide skilled professionals and entrepreneurs unlike the NRIs of yesteryears, a group that was largely composed of blue collar workers.1 These NRIs would bring with them transferable skills offering best practices and cutting edge skills which leads to spillover effects as well as capital remitted from abroad. Given the skills that many NRIs have achieved in the West, they have great potential to improve public governance and to help the urban poor.

India Warms to Diaspora

A catalyst for this brain gain is due to India’s new found enthusiasm for its NRI base as their government has realized the enormous positive impact the diaspora could have if it returned. Legislation passed in 2003 that permits dual nationality for Indians based in seven developed countries is part of a growing trend in India’s interest in NRIs – a certain reversal of India’s long time distrust of NRIs.2  The Overseas Citizenship Certificate allows most of the benefits of full citizenship without having to give up a foreign passport. Furthermore, a Ministry of Overseas Indian Affairs has been established as well as a number of programs to attract NRI intellectuals and professors to Indian universities.3

India’s Attractiveness

While the IT sector isa big part of it, as 35,000 NRI software professionals returned home permanently – mostly to IT rich Bangalore - between 2002 and 2003,4 diverse job opportunities abound in finance, telecommunications, pharmaceuticals, and R&D as Indian companies grow in scale through buyouts, mergers and acquisitions and as foreign multinationals increase their exposure in India.

Job opportunities are, however, just part of the equation. Add in rapidly increasing economic growth (projected at 9.2% in 2007) and standards of living, a traditionally rich social life, improving schools and infrastructure, attractive housing, and strong family and cultural ties, the temptation to return home permanently may be irresistible.5 

Policy Prescriptions

To further encourage this brain gain India needs to introduce policies that would attract the second generation NRIs to spend time in their motherland through semester study abroad programs during their high school and college years or through internships at NGOs in India. Greater investment and further liberalization in education so as to attract NRIs to study in India would go a long way in increasing its human capital if these Indians return permanently.6  There have been innovative solutions such as the “dual degree” program put into place at the India Institute of Technology (IIT) but such solutions need to be broad based and new institutional frameworks need to be created that link universities to industries through creative partnerships that are hospitable to return migration policies. Shanghai’s recent efforts of building centers for overseas scholars to develop businesses in development zones in Shanghai serve as a blueprint for Indian implementation.

While the government has made strides in welcoming back its diaspora, it needs to go further through greater coordination across central and local governments and administrative and academic institutions to allocate sufficient funds to higher education and concrete return migration oriented policies.7 Two steps that would further attract NRIs are agreements with industrialized countries so that returning NRIs do not suffer penalties for paying social security taxes and removing the military obligation for those holding dual citizenship.8 The Indian government could go even further by offering financial incentives through bonuses and other measures that would ease the transition back home such as job search services, housing discounts, and schooling arrangements.9

India has taken small steps in encouraging a returning diaspora but more needs to be done if India is going to attract its best and brightest NRIs back home. And during these times of economic prosperity, the task should not prove overwhelmingly difficult.

Source: www.asiaecon.org |