The author is former governor, Reserve Bank of India
The recent NRI conference reminded us of the biblical story of the Prodigal Son. Non-resident Indians, our prodigal sons, were truly the focus of all attention and hospitality — at the highest level at both the Bharatiya Pravasi Diwas celebrated in New Delhi and the global investors’ meeting in Kerala. From the prime minister downwards, dignitaries hastened to assure the NRIs and people of Indian origin that they were no longer “not required in India” but very much an asset of newly-reformed India.
At Delhi, NRIs and people of Indian origin were assured of the much sought-after dual citizenship — although opinions are divided as to what exactly this would mean, except a simplification of visa procedures. A holder of dual citizenship should not have to “walk” the corridors of embassies abroad for visas. Much more productive were the businessmen’s interactions organized on behalf of the Federation of Indian Chambers of Commerce and Industry, which enabled the sharing of experiences. NRIs should be comforted to learn that they are not alone in the hurdle-race that businessmen have to face when trying to invest in India.
The lectures that some NRIs gave Indian dignitaries to clean up their act and improve governance were received with a welcome spirit of receptiveness, although a feeling of déjà vu could not be denied. The global investors’ meet in Kerala was productive of ideas and positive responses. Countless NRI conferences have, however, fielded the same menu of suggestions and ideas — which only now India is slowly accepting.
NRIs represent, in one sense, the cream of India’s intellectual and entrepreneurial assets. That they have done well in their countries of residence — far better than they would have in India — is unquestionable. NRIs number in all about 20 million. They have done so well in business and profession that they reportedly hold net assets estimated at roughly one-third of the $ 500 billion worth that is estimated to be India’s annual gross domestic product. The 1.8 million strong Indians of the United State of America are the country’s richest ethnic group.
Further, Indians in Silicon Valley account for 40 per cent of Silicon Valley startups. That the Indian who is resident abroad has made great strides is a tribute as much to his spirit of enterprise and intellectual training as to the facilitating environment in the country he has adopted. The NRI community has also developed political clout, through its influences in the electoral process, starting from the contributions to the electoral finances in the US. The considerable pull exercised by the expatriate Indian community in the United Kingdom is also shown by the number of active politicians amongst the NRIs there.
The NRI conference at Delhi could not have been timed better. India is at the beginning of a new generation of reforms, which promise considerable deregulation and liberalization, particularly with respect to financial matters. The relaxation of foreign exchange restriction makes life much easier for NRIs, used as they are to the freer operating conditions of the US and the UK with free capital convertibility. The government of India’s bold steps, relaxing a number of restrictions on capital movements into and out of India make this all the more appropriate a time to welcome NRIs and their wealth back to India. They are being assured that they cannot only bring in money into India, but also take it out — a philosophy, which paid handsome dividends for countries like Singapore which practised freedom of capital movements at an early stage.
NRI conferences, where Indian dignitaries meet NRIs and hear their tales of success abroad and irritation with India, are not new. Over the last two or three decades, it has been the practice of finance ministers to greet their NRI friends when visiting capitals abroad. Many of these visits were not specially designed for the purpose of meeting NRIs. They happened to coincide with other meetings, such as the commonwealth conference and the annual meetings of the International Bank for Reconstruction and Development or the International Monetary Fund.
I have had the privilege of attending a few of these meetings when I accompanied the Union finance ministers, V.P. Singh, N.D. Tiwari and Manmohan Singh. I particularly recall the meetings attended by V.P. Singh at New York, when NRIs came forward with a constructive point of view. He realized that in a permit and licence raj, a quick positive response was not possible. He, however, took great interest in activating the operations of the India Investment Centre, an institution set up by the innovator, T. Krishnamachari. The IIC branches at London, New York and Tokyo did perform a useful role in smoothing the way for NRI investments in India.
I recall one conference of NRIs at Bangkok in the residence of the Indian ambassador at Thailand in 1991-92 when we were at the beginning of the reform process. Manmohan Singh was all ears as the NRIs told him of how easy it was to set up business in Thailand, obtain finances and carry on financial transactions. Their arguments for convertibility did seem to have an impact on the fertile mind of the finance minister, although Thailand itself paid a heavy price for going too far and too fast with opening up on the financial front.
The NRI meet in the same year at Singapore was also a historic one, it was primarily designed to canvas support for the State Bank of India bonds, which were reverberated. But the conference was noteworthy for the quick response by Manmohan Singh to a complaint regarding the delays in clearance of foreign direct investment proposals. He announced the automatic clearance scheme, under which a proposal would be deemed to be cleared if it did not receive a negative response from the Reserve Bank of India within a short period of time.
NRIs have, however, a legitimate cause for complaint. They are welcomed with open arms by visiting Union and state ministers and top dignitaries, but when it comes to dealing with lower level bureaucracy, they find many subdivisions even in such clearances. It is important to revive the approach of investor-friendly guidance bureaus, which some states have developed successfully to hold intending NRI investors. We should also learn from the Chinese experience and delegate most of the clearance from Delhi to the level of states and local bodies.
There is one aspect of NRI conferences which leaves a lot to be desired. We do not seem to use them for learning what in fact made NRIs successful in their new locations. We should not fight shy of learning from their successes. Not only do they bring a new angle of vision, but their rich experience should tell us what we have to do to make our environment more hospitable to talent and entrepreneurship.
Let us not forget that NRIs have contributed a great deal to India’s economy. I mean not only the investments they have made, but also their constant flow of remittances which have helped grow our reserves to their present high level. NRIs look at issues of business management from a new perspective. Their experience of countries abroad has shown them what is missing in India.
It is often stressed that NRI investment in India has been only 10 per cent of the total foreign investment, as compared to the Chinese diaspora’s contribution of 50 per cent. Partly, the reason is that the Chinese abroad have been mostly businessmen as against Indians, who have until recently been confined to the professional class apart from workmen and technicians who abound in west Asia. Explanations apart, the time has come to ascertain what irks the NRI who proposes to invest in India. We should reactivate the IIC, which may still have a useful role to play.
The time has come to shed the old “we know everything” attitude. The NRI has an undeniable contribution to make. Let us not forget that Mohandas Karamchand Gandhi himself was an NRI, who came back to India to organize our millions and lead them in the fight for freedom. The NRI learns from his experiences abroad, how things can be done differently. He dares to dream “Why not'” Let us use this rich resource of ideas for the advancement of India.
We have to draw lessons regarding what helped NRIs succeed in their new countries. To the extent possible, we should try to recreate the same conditions in India. If the Bharatiya Pravasi Diwas and the global investment meet help in sensitizing the Indian governing class to understand the changes that need to be made, these meetings would have been well worth the time, effort and money spent on them. NRI conferences should not be routine confabulations at which people gather to socialize. They should be treated as rich sources for new ideas that can regenerate India.
Such conferences of NRIs will definitely put an end to the ennui that characterizes India’s governance. May the winds of change blow through the corridors in Delhi, Thiruvananthapuram, Calcutta, Chennai and Hyderabad, aided and abetted by the newly returned Indian diaspora.