Tuesday, February 16, 2010

Tapping the Diaspora Productively

The countries in diaspora have still to evolve a more meaningful involvement of their citizens scattered all over the world in the development of their own native country. In the following article, Amitendu Palit, explains why the Indian diaspora must be engaged for more productive role in India's development

Following the PM’s assurance at the Pravasi Bharatiya Divas to grant voting rights to Indians living abroad before the end of the current government’s term, the diaspora’s contribution to the Indian economy is back in focus. At a size of almost 25 million people spread over 110 countries, the diaspora has a sizeable global presence. The bigger group in this club is comprised of PIOs followed by NRIs. The latter include Indian emigrants as well as those who have travelled abroad for shorter durations.
The economic might of the diaspora has been responsible for its growing strategic clout. Migration of skilled Indian professionals to high-income countries has helped the latter make significant productivity gains. The West has benefited the most from such migration with the US, the UK, Canada and Europe drawing large numbers of Indian professionals. In more recent years, high-income Asian economies such as Hong Kong and Singapore have become attractive destinations for Indian professionals. The professionals have contributed handsomely to the growth of these various economies in an era of high demand for skills in knowledge-intensive occupations. In the process, the professionals themselves have climbed rungs at a rapid pace. Success stories such as Lakshmi Mittal, Indra Nooyi, Vikram Pandit, Padmasree Warrior, Arun Sarin et al are well known. There are several less-celebrated stories, all of which have contributed to the diaspora emerging as a powerful economic force in terms of financial resources, managerial expertise and entrepreneurial capacities.
Remittances have been the diaspora’s biggest contributions to the Indian economy. India is one of the major recipients of migrant remittances among developing countries. In the year 2008, India topped the chart with $52 billion of remittances, followed by $49 billion in China and $26 billion in Mexico. Assuming an Indian GDP of $1.2 trillion in 2008, the remittances amount to roughly 4% of GDP. These flows have been functionally related to migration of skilled professionals from India as well as their earning capacities. The rise in both volumes of migration as well as earning capacities of migrants has positively influenced remittances. The latter have been a major source of stability for India’s balance of payments. So have been the non-resident deposits in Indian banks, though many argue that high deposit inflows are merely for taking advantage of high interest rates offered by Indian banks.
Beyond remittances and non-resident deposits, the role of overseas Indians, till now, has been relatively limited.

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