How the Great Indian Brain Drain is taking a toll on the economy

2021 ended with headlines about another set of Indian minds, including Parag Agarwal and Leena Nair, taking charge of foreign multinationals. Agarwal and Nair took charge as the CEOs of Twitter and Chanel, respectively. Indra Nooyi, Satya Nadella, Sundar Pichai and Shantanu Narayan are some of the other notable names already on that list.

In addition, Gita Gopinath, Chief Economist at the International Monetary Fund (IMF), was named the fund's first deputy managing director (FDMD) in early December and is set to take over her responsibilities in the coming weeks.

Tales of such global excellence fill Indians with pride. At the same time, these instances leave India divided, with people asking one question: Does the migration of Indian talent abroad hinder the growth of the Indian economy? In other words, is the Great Indian "brain drain" still an issue?

The Great Indian Brain drain
In 1963, the Royal Society defined "brain drain" as the exodus of British scientists to the US, seriously jeopardising the British economy. The term later found relevance in the Indian context in the post-colonial era.

Back then, there was a dire need for innovative minds and a skilled workforce to lay a firm base for the infant Indian economy. Instead, there was a spike in Indians going abroad due to better livelihoods and opportunities, and not returning. There was a ray of hope when the economic reforms of 1991 brought in several multinational companies and foreign investment, along with a part of the Indian diaspora.

However, the Indian economy is currently confronting another brain drain after that brief reverse migration of human capital.

India witnessed the sharpest increase in people migrating overseas, at nearly 10 million (one crore), between 2000 and 2020, according to the “International Migration 2020 Highlights”, a report issued by the Population Division of the United Nations Department of Economic and Social Affairs (UN DESA) in January 2021.

The report also mentioned that as of 2020, India's diaspora stood at about 1.8 crore. It highlighted that India has the largest transnational population, with approximately 35 lakh people living in the UAE, 27 lakh in the US, and 25 lakh in Saudi Arabia.

But the major issue is not about Indians leaving as much as it is about their not returning.

Indian citizenship renounced
In a Lok Sabha session in mid-December last year, the Ministry of Home Affairs informed the House that 8,81,254 Indians gave up their citizenship from 2015 to September 30, 2021.

Foreign education
In a report, news channel WION said that more than half of the first-rankers of standard 10th and 12th board exams between 1996-2015 -- the brightest Indian minds -- migrated abroad and are still employed there. In Budget 2019-20, India allocated Rs 6.43 lakh crore of public funds towards education, part of which went into subsidising the studies of skilled emigrant Indians.

In this way, the investment in the Indian educational system indirectly contributes to the progress of foreign nations. A popular meme making the rounds on social media, "Padhega India, Badhega America!" gives a humorous twist to this neglected issue.

Secondly, students choosing to move abroad for higher education also cost India about $17 billion a year in lost revenue, according to a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

However, that is just a part of the issue.

Outflow of HNWIs and skilled professionals
Of late, a large number of High Net-Worth Individuals (HNWIs) have also started shifting abroad. A 2018 Morgan Stanley bank report found that 23,000 Indian millionaires had left India since 2014. More recently, a Global Wealth Migration Review report revealed that nearly 7,000 millionaires or 2 percent of the total number of HNWIs in India left the country in 2019 alone, costing the country billions in lost tax revenue.

Furthermore, the intensifying "brain drain" phenomenon has also resulted in an outflow of skilled workers and professionals. Research published in Clinical Orthopaedics and Related Research, a peer-reviewed orthopaedic journal, reveals that about 30 percent of physicians in the National Health Services, England, are of Indian descent.

Another significant finding of the study is that while there is only one doctor for every 2,400 Indians, there is one Indian doctor in the US for every 1,325 Americans.

There are various reasons for this large-scale migration of Indians from different social and economic classes. The most common among them are better remuneration, quality education, social security, and tax concerns. Read another report by Moneycontrol to better understand the many factors pushing Indians towards renouncing their citizenship.

However, the fact remains that this phenomenon is harmful to the Indian economy. While the outflow of human capital from India cannot be entirely eradicated, there can be focused initiatives to bring the Indian diaspora back. This massive challenge before the Indian leadership, if tackled in time, could reap huge benefits for the country's economy.