India and its Diaspora

What does a population of twenty two million mean? For the sake of comparison, it is same as the population of Australia or Taiwan. It is same as Belgium and Sweden put together or thrice the population of Hong Kong. Twenty two million can be a strong number and can do remarkable things. This is how big the Indian Diaspora is. Spread across the world from the USA to Kiribati and North Korea. Indians have been travelling east and west since early middle ages (trade with current day Indonesia and Malaysia in east and Tanzania in the west). Many Indians settled in East Africa and gradually moved westward to Uganda and as far west as Nigeria. Common colonial rule was a great facilitator in movement of Indians to far off places. Some times as administrative and military assistants, sometimes as traders and sometimes as slaves (on sugar plantations of Mauritius and Caribbean). By the time India gained independence and the term Diaspora was well established, Indians were everywhere.

Ethnic Indians now work in different professions in different countries. They own supermarket chains in Africa, shipping companies in Djibouti, airline in Malaysia, head banks in Germany, run state governments in the US, and so on. The Diaspora is well spread out both in terms of geography and employment. They are a mixed bunch with high end jobs as mentioned above and low end jobs (mostly in the Middle East and to some extent in North America). Twenty two million people of Indian origin and nonresident Indians are sitting on a vast cash pile. In 2011 India received inward remittances to the tune of USD 63.3 billion from non residents. Prediction for 2012-13 are close to USD 75 billion, a bit lower than the current account deficit for last fiscal (USD 78.2 billion). While non residents have limited options of parking their money, the ethnic Indians or people of Indian origin (who are no longer Indian citizens) have a much wider choice of investments. India can tap them.

Please give us more than just hand gestures 

A comparison in Upendra Kachru’s (the first CEO of Maruti Suzuki) book, "India: Land of a Billion Entrepreneurs", of Indian and Chinese FDI inflow states that China receives almost two thirds of its FDI from Chinese Diaspora compared to India’s under 5%. India has a long way to go before it can successfully attract capital from its Diaspora. The government of India has made it easy for ethnic and nonresident Indians to park money in small investment instruments like bank accounts and fixed deposits, but there is a lack of opportunity to invest in big ticket projects which would contribute to the overall growth of economy and infrastructure development. Long gestation periods of key projects and vulnerability to corruption is one big reason why individuals shy away from investments.

Of late initiatives like overseas Indian facilitation centre (OIFC), a public private partnership between ministry of overseas Indian affairs and confederation of Indian industries (an Indian chamber of commerce) have been set up, but with little success. Long winded processes and bureaucracy holds everything back. A highly understaffed external affairs ministry is another hurdle. A city state like Singapore has more diplomats serving across the globe than India has. Indian embassies and consulates abroad are more representative of a sluggish government authority back home rather than a conduit of business. Rude and indifferent staff can make simple procedures (like obtaining signatures to attest documents) a harrowing experience.  

L.N Mittal, owner of world’s largest steel company, Arcelor Mittal and an ethnic Indian has given up on investments in India. In the past years he tried to build steel plants in Eastern Indian states of Orissa and Jharkhand but the government failed miserably to even provide the land for the plant. Indian growth story is on a bumpy ride and there are twenty two million people willing to invest. India needs to tidy up its home and set the right policies to attract investment. Staffing the external affairs ministry will be a good start. 

Avenging national shame

It all started at home. The opposition accused the Congress lead UPA government of policy paralysis when it failed to come up with a worthy policy reform in its second stint. Inflation was riding high, foreign investment was slowing down and a string of corruption scandals battered the government. A home grown middle class movement against corruption and the government’s poor handling of the whole movement further damaged its image. The government’s inability to perform and slowing down of the economy brought the corporate India to the front-line. Corporate India openly blamed the government of failing to live up to the expectation and deliver long promised reforms. All was bearable till this point. But suddenly the matter started to get international attention.

It was The Economist which published first of the series of the “damning” articles against the Indian prime minister. In its December 17^th, 2011 edition (India’s political paralysis – Gasping for breath) the newspaper started the article saying, “A LESSER man might have quit by now. Even Manmohan Singh's fabled ability to endure humiliation is being tested”. The reference was made to Mr. Singh being undercut by his colleagues including Mrs Sonia Gandhi. If this was not enough, the same newspaper yet again in its April 14^th 2012 blog called Banyan, accused Mr. Singh of leaving a job half done (referring to the economic reforms). The matters became worse with the Time magazine branding the prime minister an underachiever in its mid July edition. Quickly after the report, The Independent of the UK branded him a poodle of Mrs. Sonia Gandhi.

Will the real underachiever please stand up

This generated a huge uproar in the country; the politicians first ignored it but later lashed out at the foreign media and accused them of spreading false information and insulting the head of the state. The opposition parties took the opportunity and the BJP (the main opposition party) said the Time magazine is late to the party (implying that the prime minister was always an underachiever). Public opinion rode high on patriotism and social media buzzed less with support for the prime minister and more with, “how dare you say something about my prime minister?” The common man took it too personally and eventually The Outlook, a weekly Indian newspaper came up with its own version of Mr. Obama being the real underachiever.

No one can deny that Mr. Singh has failed to deliver in his second stint. There was no big ticket reforms pushed through parliament. The only policy decision worth remembering was to allow foreign direct investment (FDI) into multi brand retail, which sadly was reversed within a fortnight. The Indian middle class loathes the ruling UPA due to high inflation and a consistent inflow of corruption scandals. However, the moment criticism comes from foreign countries it’s not welcome.

In all this madness, what comes out clearly is the relevance of India to rest of the world. How many times does The Economist or the Time magazine talk about the head of the state of Lesotho, or Estonia, that too on their cover? All the attention that Mr. Singh and India is attracting now is because India is too big to be ignored. Indian economy is now linked to the world economy. Stung by domestic slowdown western companies are looking towards the untapped markets in India. Policy paralysis or underachievement by Indian government is as much a worry to the west as it is to Indians.

The Outlook can always launch a counter attack, which at its best was juvenile, given the usual scope of coverage by the magazine. The masses can pour their anger on the Internet, politicians can use the situation for personal gains, industry can feel vindicated, but in all this cacophony there is a subtle message which says India is becoming important in world affairs. Someone in the government should read this message. Stand still too long and others will overtake. There are many of them by the way.