‘India Shining’ campaign is passe. Now, we are told, the country is transitioning towards ‘Amrit Kaal’. All told, of late we have been reading reports that significant numbers of high net worth individuals (HNIs) and their families based in various parts of India are expected to leave the country, if they have not already bid goodbye. But why?: Is it for new opportunities or a better lifestyle — none, both or something else? The Pioneer’s Shikha Duggal gives you the lowdown on what is off-putting to the stinking rich in India.
Having lived in the United States for close to nine years now, I work in tech and live in a truly global community among friends where my hard work is appreciated. But, what fundamentally drives me to call where I live my home is the bounty of nature. I was born in a small town in southern Odisha. I spent the first few years of my childhood there.
Near our ancestral home was a big lake surrounded by poinciana trees and you could see mountains all around. My uncle would take me on boat rides on the lake and, at night, during power cuts, I would stare at the starry night sky, unadulterated by artificial light, with wonder. Those days were truly magical. My father was working in a bank and would get transferred every three years. I mostly lived in small towns and always maintained a connection with nature. Everything changed when I moved to Bangalore to take up a job.
The never-ceasing stream of vehicles, the unrelenting traffic, the overcrowded public places, the constant chaos, the dangerously high rates of pollution, and the utter disregard for nature and the planet were simply unbearable for me. In our quest to build the most high-tech cities, we fail to realize that we have to make our cities livable first,” says NRI Sumeet Dash, who is living happily in the United States of America.
He can afford a place close to his office. Every day, he feeds squirrels and ducks in his backyard while the occasional rabbit or raccoon amble by. He sometimes spends so much time staring at the trees that his wife gets offended. His bond with nature is evermore stronger now from the time he moved abroad! So, this was the meaning of life for him which made him go overseas. According to reports, Australia, the United States, and Switzerland are the most preferred investment destinations for the wealthy and affluent people of our country. And, the case of Sumeet Dash exemplifies the pattern of living abroad that allures wealthy people.
Tax policies and ease of doing business
It is about the need for appropriate government regulations. You are not really flexible in doing business in the native country because you have to have a political link as well. Even if it is a small startup that somebody has to set up, he has to run around many departments and eventually he will begin operations, but then sustenance becomes a difficulty. “However, on the other side, those who have already established themselves, the challenges are no different.
Once the government changes, you have new regulations coming up and the scope of innovation dies! It is because the entire system here in our country comes down to sustenance in the market. On the contrary, in the other countries to which people are emigrating at the moment there is more financial independence and stability,” enunciates MK Pasha, an advocate of the High Court of Hyderabad.
There if you respect the law then the law also respects you and stands by you! Majorly, a democratic country has a lot of political turmoil and according to the proponent—it is quite evident from the present scenario that the turmoil will continue. Every state has a different system, and you get crushed between these! “And if there’s any dispute and if we are talking about thousands of crores deal, supposedly it fails, then what remedy do you have in the country to resolve that as soon as possible?
That legal quotient is becoming difficult in the country! You move to a foreign land; there you have your own citizenship rights, and the matters are disposed quickly unlike here because it takes ages running to the court for hearings after hearings. So, you have that confidence over there. I understand that we have a Constitution here and it is good. However, high net worth individuals’ time is important too,” he adds.
Political environment
So much of emigration has happened and is continuing for a good quality of life, excellent infrastructure, health care, business opportunities, and a lot more. “One of the main reasons would be the ease in rules of eligibility in emigration and procurement of citizenship; so, a lot of people are opting in for these opportunities.
Also, due to scarcity of labour and fewer populations in certain countries, they are coming up with attractive offers for people who may want to settle down in their country. Professionals and businessmen are getting global exposure, less or no tax, qualitative potential customers, and a stable established market, which is unlike in our country where people are price sensitive and think twice before buying goods and availing services,” observes Sahebzadi Feroze Jahan Begum, the granddaughter of the last Nizam.
Another important and concerning reason she felt could be the cause of the extensive emigration is the changing political environment and lack of trust in the system! “The elites think that their assets would be far safer in a stable economy free of land grabbing, corruption and an insecure environment. I am one of them.
People today are attracted to the UAE more because of less or no taxes, minimal corruption and the golden visa opportunities on a quick investment through business or property. Our seven generations ruled; so, Hyderabad is my heart. I would love to travel around but going and staying in another country permanently makes no sense to me where I cannot have my culture. It is always good to have options, but I won’t be emigrating from my country because my family’s rich legacy lies here, and I intend to promote every bit of it.”
So, 6,500 should not be a matter of concern as only 0.81% of the HNI population plans to move out of India!
Following could be the fundamental reasons why wealthy individuals want to move out of the country, even though they have reasonable love for their motherland, opines Manu Rishi Gupta, CEO of MRG Capital:
—The people who are exiting are the people who achieved everything and are well be above 50 years of age. Having lived 2/3rds of their life, all people look forward to is quality of life, robust law and order, clean air and ease of movement.
There is no way that our country will reach there where the top cities of the world have reached even in the next fifty years.Our top ten cities are so haphazard that they have virtually become inhabitable w.r.t either the quality of air, town planning, law and order, ability to call for paramedics or reach hospital in time without getting stuck in traffic.
—Human life has very little value in this country. A leading doctor has vanished in a drain in Mumbai floods last year and the Mumbai corporation has got away with it. In any other country where life is valued appropriately, the city would have gone bankrupt in giving punitive damages to the family of the doctor.
Walk into a police station in the country when in trouble and you want to kill yourself. Law and order for common man is not an issue in developed world; of course, the developed world has its own issues like the civil unrest or incidence of mass shootings. But calculate all that on incidents per million population and the developed world still comes out a winner.
—The fabric of society in the developed world orchestrates success and celebrates success. As a nation we are resentful towards successful people and our education system is such that while we make world-class managers, we have failed to give them right opportunities or red-tape free conditions to innovate or progress.
In developed world, democracy (if there) is celebrated and protected. In our country, while we are a democracy, one realistically does not have the right of free speech or expression or action. People are happy to lead a good quality of life in countries, growing at 1-2% and happy to leave the potential higher growth here because of the infra issues, quality of life and lack of true democratic conditions. People who are leaving are those who can afford to leave, and they also are the ones who can shape the country. If we lose 7-8 thousand people every year who are at the top of the pecking order financially, there will not be many tax payers left in the country; considering only 2-3% of India pays personal taxes, going by Manu Rishi Gupta’s analysis.
As per the data published by the Ministry of External Affairs, 2.5 million Indians emigrate every year. At present, the total number of the Indian diaspora, including both NRIs and persons of Indian origins, stands at 32 million.
Affluent families have a vision for themselves. Globalization and advancements in technology have created new opportunities for us to establish successful businesses and careers abroad. Many wealthy individuals initially moved overseas to pursue these opportunities and have gained international exposure and experience. However, as our economy has been growing steadily and providing favorable conditions for business and investment, some wealthy Indians are now returning to capitalize on these opportunities in their home country.
Jaya Mehrotra, a leadership and executive coach, shared with us: “The increasing stability and potential for growth in India’s financial services, healthcare, and technology sectors are attracting wealthy individuals back in greater numbers. The top priorities of wealthy individuals can vary based on their personal circumstances and aspirations too.
Wealth preservation and growth are often key concerns for the wealthy. They seek opportunities to protect and increase their wealth through investments in sectors with high growth potential. The impact of this trend can be significant for the country in various ways. Firstly, the return of wealthy individuals can bring substantial investments into the financial services, healthcare, and technology sectors.
This influx of capital can drive innovation, create job opportunities, and contribute to economic growth. Additionally, the presence of wealthy individuals can lead to increased consumption and demand for luxury goods and services, thus stimulating various sectors of the economy.”
Moreover, the knowledge, experience, and networks that these individuals bring from their international exposure can benefit local businesses and entrepreneurs, fostering collaboration and the exchange of ideas. “The US, the UK, and Canada have traditionally been attractive destinations due to their robust economies, well-established financial markets, and renowned educational institutions.
These countries offer a conducive environment for business growth and provide access to global markets. The EU nations, Dubai, and Singapore have gained popularity among Indians for various reasons. The EU nations offer a combination of cultural diversity, historical significance, and economic opportunities. Many Indians are drawn to EU countries for higher education, employment prospects, and the chance to experience different cultures within a relatively close proximity,” she adds.
Dubai, on the other hand, has emerged as a prominent destination for wealthy Indians due to its strategic location and business-friendly regulations. Dubai has established itself as a global business and trade hub, attracting entrepreneurs and investors from around the world. The city’s infrastructure, modern amenities, and luxury lifestyle options have also made it appealing to wealthy individuals. Moreover, Dubai two years back, introduced the golden visa program, which has further increased its popularity among wealthy Indians.
This program allows individuals to obtain long-term residency in the country by investing in property or making significant financial contributions to the economy. The program has essentially rolled out the red carpet for Indian investors and entrepreneurs, offering them an opportunity to establish a presence in Dubai and enjoy the benefits of residing in a thriving international city. “We witnessed this post pandemic growth.
However, we can see things are reversing due to the effect of inflation which will also have an impact on the quality of life. As a result, the current data will look very different by January 2024. We are to witness increasing unemployment. Similarly, Singapore has also become a preferred destination for wealthy Indians. The city-state boasts a strong economy, political stability, and a well-developed infrastructure.
Singapore’s pro-business policies, low taxation rates, and ease of doing business make it an attractive choice for investment and wealth management. These destinations offer a range of benefits for wealthy individuals seeking global connectivity, business expansion, investment opportunities, and a high standard of living. Whether this trend should be a major concern or not depends on the context.
On the one hand, the return of wealthy individuals can bring significant economic benefits to the country, as discussed earlier. On the other hand, it is important to ensure that policies and systems are in place to attract and retain this wealth within the country.
Governments and regulators should focus on creating an environment that encourages entrepreneurship, protects investors’ interests, and provides adequate infrastructure and support for businesses to thrive. By addressing these factors, India can benefit from the return of wealthy individuals, while ensuring sustainable growth and wealth retention within the country.”
In fact, over 1.63 lakh Indians gave up their citizenship in 2021 alone, with most people settling in the US. More than 3.9 lakh Indians have given up their citizenship in the last three years, according to the Ministry’s reply in the Lok Sabha.
Nikhil Nanda, an entrepreneur, remarks: “People are not tax-compliant here. Yahan par logon ko tax chori karne ki aadat padh gyi hai. Especially, with the advent of digitisation it has increased tenfold. But there is an upgrade. For example, the Vande Bharat Express! We are getting newer and many airports in remote areas. I am spotting the population who is leaving the country are the ones who don’t want to be tax compliant.
They want to capitalise out of the country! Most probably, will have a miniscule impact on our country — as an entrepreneur I know we are one of the highest in the mass production of mass unicorns. Wealth creation is faster than the wealth erosion, you see. It is raining heavily from the past four days, and the result is: flooded roads and apartments.
Why would one want to stay back? I know of data where some of the countries are giving shelter to the refugees on a larger scale and their results are riots!”
At the end of the day, once the standard of living improves in India, why would many of those who have emigrated flinch from returning to the country? Is it a big deal? Time will tell.
