Search the Internet          Tips  Sites: Finance, Investment

Recent Specials

Are pension fund      schemes bad ideas? Strong rupee adds      to IT firms' woes Chance to get state      finances back on track The small screen sees      a big battle Why you need personal      accident insurance 'RBI should deregulate      savings rate, cut CRR' Reforms: One step      forward, two      steps back The state governments'      precarious finances

The importance of being an NRI

A K Bhattacharya

The BJP government is going all out to woo the Indian diaspora. A grand show - Pravasi Bharatiya Divas - has been organised by the ministry of external affairs in collaboration with the Federation of Indian Chambers of Commerce and Industry.

A government that is yet to ensure free access to drinking water and primary education for all its people living in the country is set to splurge Rs 11 crore (Rs 110 million) on a three-day show to understand the sentiments of those who chose not to live in this country.

Officially, of course, the celebrations are expected to help create a policy framework for a sustained and productive interaction with the Indian diaspora.

But why should the Indian government put up such a show? The organisers point out that the Indian diaspora today numbers over 20 million, spread across 110 countries and five continents.

So, the government had set up a committee, which concluded after a brief survey that the goodwill among the Indian diaspora is deeply entrenched and is waiting to be tapped through a mix of right policy framework and initiatives. The three-day show starting tomorrow is aimed at facilitating such initiatives.

There is also the inevitable comparison with China, that is being cited in favour of an initiative to woo the Indian diaspora. It is the Chinese expatriates in the United States who have played an important role in attracting foreign investment in China, it is argued.

Without the powerful Chinese lobby in the US and other Western countries, China wouldn't have been a political and economic force that it is today.

And if China could tap the non-resident Chinese to fuel its growth, why shouldn't India do the same with the help of a large number of influential Indians settled in different parts of the globe?

This may be logical thinking. But take a close look at the recent track record of the Indian diaspora and you might like to revise your opinion. India faced its worst balance of payments crisis in the early nineties.

Its foreign exchange reserves were dwindling rapidly and it was coming perilously close to defaulting on meeting its international payments obligation. And who came to India's rescue? Not the Indian diaspora, also described as non-resident Indians.

On the contrary, many of these NRIs began pulling out their repatriable deposits parked in Indian banks. This created a panic situation in the country. The government had to eventually mortgage a part of its gold reserves with the Bank of England and even explore the possibility of selling its real estate in some foreign countries.

The NRI deposits continued to shrink even as the Indian government was forced to seek a loan from the International Monetary Fund.

Yes, the NRIs came back to India, but only when the government offered a new deposit scheme for them. And the beauty of this scheme was that the NRI depositors could not be asked any questions about the source of those funds. Nor could any tax-related questions be asked on those deposits.

The depositors and their beneficiaries enjoyed complete immunity from any possible violation of tax laws in the country. The scheme was hugely successful and was responsible for the steady rise in India's foreign exchange reserves during the months immediately after the crisis was averted.

Why blame the NRIs? What they did was quite rational and practical. Who wants to keep his hard-earned money in a bank in a country which is close to sinking? Why should the NRIs bother for a country that has failed to get its act together to emerge as a strong economic power? And why shouldn't they invest in a scheme if they see tax or other benefits ?

The real problem with the celebration of Pravasi Bharatiya Divas on such a grand scale is the hypocrisy behind its organisation. The NRIs are not here to do charity. Many of them are naturally fair-weather friends of India. If India does well, we would get the support of many more NRIs.

If we fail, most NRIs would desert us. Let us not fool ourselves by believing that the Indian diaspora has a deep, abiding and unconditional commitment to India's welfare. This commitment will be there only when India remains an economically viable option.

If the NRIs today want to commit themselves to serving their 'motherland', as the government wants to believe, then it is primarily because the Indian economy today is an attractive destination for doing business. The Chinese diaspora also worked to China's advantage because the Chinese government took adequate care of its economy.

Let us also not compare the NRIs of today with Mahatma Gandhi. The organisers have chosen January 9 as the day to launch the Pravasi Bharatiya Divas because that is when the Mahatma decided to return to India after a two-decade long stay in South Africa.

Powered by

ALSO READ:
More Specials
More Money Headlines