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Should PIOs be given special treatment?
BS Bureau |
January 14, 2004
Confederation of Indian Industry
I am often asked why the 20 million persons of Indian origin -- who, if counted separately, would be the 50th largest country in the world -- do not contribute as much to India's economic development as do the non-resident Chinese (NRCs).
Calls are made that we need special policies favouring PIOs, giving them reservations, representations and higher interest rates so that we can attract more investment from them.
Yes, it is true that NRCs invest far more in China than PIOs invest in India. But what must be remembered is that the rest of the world also invests far more in China than it does in India.
So the question to ask is whether NRC investment as a percentage of total foreign direct investment in China is much higher than the PIO investment in India as compared to the total FDI investment in India?
And also, to remember that the 'occupation' profile of NRCs is very different from Non-Resident Indians.
Most successful PIOs are in the services sector -- doctors, bankers, teachers and so on -- in the West, whereas most successful Chinese are businessmen in south-east Asia or in east Asia, outside mainland China.
Therefore, the Chinese have (a) more to invest in; and (b) being businessmen, they have the entrepreneurial ability to invest in a new business back home. The PIO, by and large, is a different type of person.
But, of course, we are seeing successful PIO entrepreneurs and venture capitalists.
PIOs have done well in some businesses such as hotels and small retailing. However, owning a shop in Southall does not mean that you will invest in a shop in Delhi's South Extension.
The same PIOs who do not invest in India, however, bring something more invaluable -- prestige. From Kalpana Chawla to Rajat Gupta to Lakshmi Mittal, everyone's talking about PIOs. Their intellectual quality, their technological capability, their courage, are the symbols of PIO success.
Do PIOs need special treatment? No. A PIO might have come from India, or her grandparents may have come from India, but today she is a citizen of another country.
I do not think it is correct, or for that matter legal, that India discriminates in favour of one citizen of the US over another just because the first has a surname Srivastava and the second has a surname Smith.
We have been wooing PIOs. I congratulate the Indian government for showing even more concern for all the children of Bharat mata. Prime Minister Vajpayee has, in his past two to three Independence Day addresses, greeted overseas Indians.
The PIO card scheme was created for them. PIOs are investing in India whenever it makes business sense for them.
Many IT entrepreneurs who set up successful IT businesses in Silicon Valley have opened subsidiaries in India, but they are doing so because it makes eminent sense for them to tap Indian talent.
But I don't think that PIOs are putting in more money simply because they are PIOs or because they have a PIO card (very few, actually, have taken this card). Therefore, I am not in favour of any special extras given to PIOs.
In the 1990s, when our economic reforms were tentative, when we were hungry for foreign investment, investment by PIOs seemed easier to achieve.
Today, when our economy is bigger, when our domestic businesses are stronger and investing more, when the rest of the world is more confident about India and investing more, we no longer need to give any category of investors a differential welcome.
Worrying about what more India needs to do about increasing inward business investment by PIOs is the wrong question. I think the question to ask is: what can we do to increase outward political investment by PIOs. That is, how can we make 20 million PIOs a voice to be reckoned with in the councils of the world's important nations?
I join my fellow Indians in welcoming Pravasi Bharatiyas back to Delhi. I am proud of them. I wish them well. However, I do not want to beg for their money.
I would rather make India so attractive to invest in that the whole world, including those mythical NRCs, will come here, not just PIOs. Then, things could get interesting.
Maybe 10 years from now, Business Standard will write an article comparing rates of investment into India by overseas Chinese and overseas Indians. Who knows, you might find that the canny Chinese might actually be pumping more money into India than PIOs!
Lord Meghnad Desai
Centre for the Study of Global Governance,
London School of Economics
There was a time when Indians leaving for foreign countries carried a heavy burden of guilt. They were, after all, abandoning their motherland and becoming part of the brain drain.
Nowadays, there are the occasional demands for compensation to home countries for loss of skilled citizens. But the balance has now shifted from guilt to gratitude and gratification -- the home country feels grateful and the emigrant, the 'pravasi,' is gratified.
Last week in Delhi, there was the second lovefest of the Bharat vaasi for the Bharat vanshi, of the stay-at-homes for the footloose and the prodigals.
Yet while it is good to love and be loved, is there an economic case for the pravasi promotion? Just as the original complaint about brain drain was based on some dubious economic logic, will the high hopes placed in the pravasis be also lacking in economic logic?
In economic terms, it should make no difference whether capital is domestic or foreign and if foreign, whether it is Diasporic or not.
Indeed, if a Non-Resident Indian was to invest in India, one hopes that the discussion is based on sound economic calculation rather than sentiment that has its place in film songs but not in real life economic discussions.
But there is more to it than just that. If India wants to attract foreign capital -- and I hope that it does, because it needs to -- then it will be off-putting for a person not of Indian origin -- a videshi, as it were -- to think that he is being discriminated against because his ancestors are Japanese or Chinese or Dutch.
India should adopt a symmetric policy for attracting capital. Be it pravasi or pardesi.
There is the same argument about skilled labour, but all countries are irrational when it comes to employment.
If there is a person who has useful technical skills to contribute, India should attract him. There is no economic logic to prefer a pravasi over a videshi. Of course, sentiments dictate otherwise. But sentiment is not a good guide.
Indeed, some pravasis, for instance, those settled in the West Indies or South Africa, may find themselves treated as quite foreign because they don't feel or behave like an NRI coming back. It is a generation thing.
If you are just a first or second generation person returning, you may adapt easily but after that you are only notionally a pravasi and not a pardesi.
The real point of the Diaspora fest is different. The celebration of the pravasis and the welcome accorded to them are signs that India is at ease with itself and with globalisation.
India is confident that it is an attractive proposition for investors and that foreign capital, and skills are welcome.
It is easier to pretend for a while that the pravasi is not quite a pardesi. Yet as you meet the descendants of those who left only in the past 50 years, you realise that the distinction is quite sharp.
The loyalty of the old emigrant is -- as it should be -- to his or her host country. It is there that their ancestors found opportunities and made a new life. They may like a nostalgic visit back to their roots but then heads and hearts are firmly back where they live.
India should be happy with that and treat them like it would treat any friendly face.
In the 19th century phase of globalisation, there was not only free movement of capital and trade, but also a lot of free movement of labour.
One-third of Europe's population went over to North America; many from India went to the West Indies, to south and east Africa and to south-east Asia.
Even though they went as indentured labourers, they went to improve their lot. They chose emigration as an anti-poverty strategy. And even though today we think of the Caribbean and Africa as poor Third World areas, the people there are better off than their cousins who stayed behind in Uttar Pradesh and Bihar.
Migration is still visible as an anti-poverty policy but it is a policy ordinary people can pursue as long as their host countries do not put any obstacles. America is very good at welcoming and benefitting from migrants.
Indeed, it's a country built by migrants. The European Union is much more inflexible and resistant to migration and it will pay a price for this attitude by way of a stagnant ageing population.
The way forward is then clear. What we need is more people to become pravasis, more interaction across the globe of capital and labour.
The message is not just that all pravasis are just like desis but that in a globalised world, we are all pardesis.