We Indians, as the citizens of India, must feel proud that our country is getting richer by the day. Presently, India, with wealth equal to $8,230 million, is globally the sixth wealthiest nation in the world. This is borne out and confirmed by the fact that at the end of 2017, the number of HNIs in India was 3,30,400. As per media reports, the combined wealth of such people is Rs 15,300,000 crore which nearly equals the cumulative market value of nearly all the companies listed on the Bombay Stock Exchange. But what adds a bad taste in the mouth is the report, which just came out, that such HNIs seem to be in a tearing hurry to exit the country.
Fraudsters and swindlers like Vijay Mallya, Nirav Modi and Mehul Choksi, in a bid to escape the long arms of the law, have fled India. The government is trying to get them back to face law but the efforts have proved unsuccessful so far. However it needs to ponder on the fact that the exodus of rich Indians from the country is increasing by the day.
Though the government of India launched a renewed thrust on improving ease of doing business, the country has been a witness to a steady migration of its HNIs. As per this recent report, this exodus of India’s well-heeled may be attributed to better standard of living, better education, work and business opportunities, law, order and security in the countries of their choice, though not necessarily in the same order. The ease of doing business in the country, with claims to be the fastest growing economy in the world, went up from 100 to 77 in the last few years, but it seems that it was not enough in creating a proper overall environment for the dollar-millionaires to stay back.
According to London-headquartered global citizenship and residence advisory Henley & Partners (H&P), which advises people desirous of seeking citizenship or residency in other countries in return for monetary investments, in 2020, there has been a 63% increase in the number of people wanting to migrate from India. A host of reasons, to the effect and how to mitigate them have been discussed herewith.
In 2018, even before anyone had heard of coronavirus, as per a joint report by Mauritius based AfrAsia Bank and New World Wealth, aptly titled Global Wealth migration Report (GWMR) 2019, nearly 5,000 dollar millionaires or around 2% of total High Networth Individuals (HNIs) in India, migrated from the country. The number of HNIs migrating from the mother country to some other country was 15,000 for China, 7,000 for Russian Federation, 5,000 for India and 4,000 for Turkey. The exodus from China, Russia and Turkey is self-explanatory as these countries do not have any semblance of democracy and people may have shifted due to political suffocation but the addition of India, with its democratic values and open atmosphere, in this undesirable grouping is a cause of worry.
Prior to that, The New World Health informed us that that 7,000 uber-rich Indians left the country in 2017 while according to The 2017 Global Wealth Review: Worldwide Wealth and Wealth Migration Trends, 6,000 HNIs had moved out in 2016. The number was 4,000 for 2015.
The trend of exodus of millionaires from the country is not new and has been rapidly gaining pace over the last few decades as can be gleaned from a joint report by New World Wealth and LIO Global, titled Second Citizenship and the Migration of HNWIs, 2000-2014, released in July 2015, which says that “India has seen the second biggest outflow of high net worth individuals in last 14 years, with as many as 61,000 millionaires shifting base.”
A fact worth mentioning is that nearly a 100 HNIs have migrated to a developing country like Mauritius, which is gaining them as we lose them. Thus, it becomes clear that the exodus of HNIs from India in the past years has a deeper malaise behind it, that needs to be investigated, plugged and taken care of.
This mass departure of the ultra-rich should not particularly concern, alarm or worry India, The New World Wealth report notes, as the country is still producing far more new HNIs than it is losing. Also, several of these people would move back once the standard of living in the country improves to their liking.
It is a fact that as the economy of the country grows at a faster clip, despite the exodus of the wealthy elite, the number of HNIs is increasing. According to the report, India, with a growth rate of 96%, is ranked at the fourth slot in the world in terms of adding the most number of new HNIs. As per projections, in terms of wealth creation, India may move ahead of UK and Germany by 2028 and be ranked after USA, China & Japan as the fourth largest wealth market. But if the country really wishes to become a developed nation and be included in the fraternity of the leading countries of the world, then it has to gain the ability and become an attractive destination for the uber-rich.
The AfrAsia Bank report further notes that Australia was the favourite destination for the HNIs where 12,000 of them have migrated since 2008, beating USA and Canada into second and third place at 10,000 and 4,000 respectively. In the past decade, there has been an increase of 83% in total wealth held in Australia.
Thus it is imperative upon the policy planners to seriously think about the reasons behind the exit of India’s well heeled. But before doing so, there is a need to explode some myths. One favourite gripe of HNIs is Tax Terror but the argument of the government is that it is being done to flush out black money and increase tax compliance.The tax rate on personal income in Australia is high; despite that, the country is a magnet for ultra-rich individuals. Thus, it is clear that tax rates have less to do with migration. Generally, two further reasons are trotted for the same-availability of quality education and opportunities in hi-tech sector. But looking at the numerous evidences all around, India does not lack any sort of opportunities in these two sectors.
One main reason for migration, as per AfrAsia Bank, is security. The HNIs wish to migrate if their families, especially their women and children, are not secure. The other reason cited is the environment. If in any country, there are disputes between different communities and religions, it distorts the social infrastructure and creates an atmosphere of insecurity. Third reason given is an open atmosphere. HNIs wish to live an open atmosphere and do not appreciate if they are prevented from gaining information about various ideas. They themselves desire freedom of expression. The fourth reason is that if in any country, the speed of economic development is slow, opportunities dwindle down and poverty grows. This again leads to an atmosphere of insecurity. All these reasons are important and so, it is required of the government to ponder over them seriously.
- In the country, the alleged reforms in ease of doing business have not been as effective as they were thought to be. At present, huge amounts of the country’s capital is being pumped out and moving abroad. As a result, our growth rate is continuously dipping. In such a scenario, the primary suggestion is that, for reforms and improvement in security arrangements, the government must go in for independent external audit of civil services officers. The Fifth Pay Commission had recommended that all the class A officers of the government must be subjected to external audit but it was scuttled by vested interests. The government must implement this suggestion so that it gets to know who the corrupt officers are. This only can reform the security landscape of the country.
- Nearly every religion has a presence in India. Besides, a large number of communities also reside in the country. It is but obvious that there are bound to be differences between them but all these must be resolved peacefully, without any rancour or bad blood, so that any chance of a polarized environment can be easily mitigated. This is the time for second suggestion. In the last few years, there has been a talk of establishing an Indian Institute of Religions (IIR), on the lines of IIMs and IITs, where a free and frank discussion of ideas between adherents of different religions should take place so that a common ground can be arrived at, and peace, harmony and cordiality be established in the society at large.
- The third suggestion is related to the freedom accorded to the media. As we are well aware that media is the fourth pillar of any thriving democracy. A vibrant media identifies various problems that ail our society so that people who matter, can deliberate on them and provide real time solutions. It is the platform on which people exchange and share various ideas, opinions and political views.This makes them sufficiently well informed to make proper decisions. The government of the day must treat the media as a well-intentioned and sincere critic whose criticisms would help it to identify its flaws and rectify them.
- The fourth suggestion is related to economic growth in which two mutually opposite movements can be discerned. While our GDP growth rate is dipping while the share market is constantly scaling new heights. The clear reason is that our economic policies are encouraging and promoting industries in the large scale and organized sector; and are not compatible with small scale and unorganized sector and business. The government must take a hard and clear look at these policies and try to rectify any flaws therein.
- For the last suggestion, the government must take a leaf out of USA’s book and go in for Exit Tax. Under this arrangement, if a person wishes to give up American citizenship, he/she has to pay a real heavy tax. The idea behind this tax is the citizen, wishing to give up the citizenship, must surely have benefited from the economy and these benefits have to be returned. A very large exodus of educated people and millionaires from India is taking and they are willingly acquiring citizenship of different countries. Such people should be subjected to heavy exit tax so that any profit that they might have accrued from the Indian economy must be reimbursed back, to the mother country.
By somehow implementing these suggestions, we shall be, to a large extent, able to reduce and prevent the exodus of HNIs from India and make India into an attractive destination for them.