Analysis of the effect of Indian diaspora to the Indian economy

Abstract

The High Level Committee defines the Indian Diaspora as ‘a generic term to describe the people who migrated from territories that are currently within the borders of the Republic of India. It also refers to their descendants’. The Diaspora is currently estimated to number over twenty million and comprises of "NRIs" (Indian citizens not residing in India) and "PIOs" (Persons of Indian Origin who have acquired the citizenship of some other country). The Diaspora covers practically every part of the world. It numbers more than a million each in eleven countries, while as many as twenty-two countries have concentrations of at least a hundred thousand ethnic Indians. The Diaspora has succeeded spectacularly and has contributed to the growth of India both directly and indirectly. India receives almost $14 billion a year in official remittances and this money has played a significant role in India’s $80 billion foreign reserve. With 20 million persons of Indian Origin in 110 countries, the Diaspora is just over 2 per cent of India’s population but their estimated collective income is at about $160 billion, almost one third of India’s gross domestic product. The migration of the highly educated and skilled labor was once considered brain drain as it leads to the wastage of the resources the government invested in each of the individuals’ education. However the view has changed and has given risen to the concept of brain circulation where it is believed that diaspora contributes to their home country in several ways through international networks, knowledge and expertise sharing, investments etc. Till very recently, the government of India did not have any major policy regarding the Diaspora. The recent past has seen a change in this trend with the government making attempts to woo the migrant Indians. It is felt that in order to encourage more active participation of the migrant Indians, the government should take strong policy measures and mere statements and programs will not help.