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Business News/ Politics / News/  The rise of the NRI, the influential non-voter

The rise of the NRI, the influential non-voter

Where do NRIs live and what happens to the $70 billion in remittances they pump into the country every year?

Politicians from Prime Minister Narendra Modi to Congress president Rahul Gandhi make it a point to court overseas Indians, making them, perhaps, the most consequential bloc of non-voters in India. (PTI)Premium
Politicians from Prime Minister Narendra Modi to Congress president Rahul Gandhi make it a point to court overseas Indians, making them, perhaps, the most consequential bloc of non-voters in India. (PTI)

In 1936, Radhakamal Mukerjee, a famous Lucknow-based social scientist, wrote a book titled Migrant Asia that contained an introduction by sociologist Corrado Gini (of Gini inequality index fame). The basic premise of the book was that labour-surplus regions in Asia, especially India, should have the option of redistributing its population around the world. It would be welfare-improving for everybody.

The transatlantic age of mass migration between 1870 and 1914 was then still in public memory as over 40 million people had moved away from Europe. So was India’s own brush with mass migration, as nearly 40 million people had moved overseas in the century following 1834, when organized recruitment for work in the plantations of Mauritius began during the colonial era.

A mix of old and new migrations has created a 30 million-strong diaspora.
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A mix of old and new migrations has created a 30 million-strong diaspora. (Naveen Kumar Saini/Mint)

But Mukerjee picked the wrong decade to make his case. In the 1930s’ world of economic depression, Mukerjee’s view was anathema as racist visa walls had already begun to emerge in response to the initial wave of globalization. One reviewer of Mukerjee’s book in the Quarterly Journal of Economics called his views “diffuse". And contrary to Mukerjee’s wishes, Indian emigration volumes collapsed over the next three decades as even traditional outlets such as Myanmar, Malaysia, and Sri Lanka dried up.

From the 1970s, Indian emigration began to surge in a new wave of globalization to a point where, by some estimates, there are more emigrants of Indian origin today than from any other country in the world. As in the 1930s, they find themselves, yet again, facing a backlash over immigration and globalization. However, unlike the 1930s, they have acquired newly minted political clout in an independent, aspirational India. Politicians from Prime Minister Narendra Modi to Congress president Rahul Gandhi make it a point to court overseas Indians, making them, perhaps, the most consequential bloc of non-voters in the country.

The Indian Diaspora

Over the past hundred years, Indian emigration has made two fundamental switches. In terms of mass movements within Asia, emigration from the country’s eastern seaboard toward South-East Asia has been replaced by emigration from the west coast toward the Persian Gulf countries, which now account for half of India’s emigrants. This switch occurred due to an economic and regulatory shock across the Bay of Bengal (Burma’s strict 1982 citizenship law) and the frenetic growth of oil-based economies across the Arabian Sea.

Outside Asia, Africa and South America fell out of favour as the needs of the old plantation-based economies of the colonial empire changed and Europe and North America gained popularity as racist visa walls were torn down in the second half of the 20th century. As a result of a mix of historical and contemporary emigration streams, different categories of overseas Indians have come into the picture.

Emigrants are usually defined as those overseas Indians who claim India to be their birthplace, and number close to 15 million people. They are usually referred to as non-resident Indians (NRIs), though some have also given up their citizenship after naturalization. Changing citizenship is not an option in the Persian Gulf countries which absorb the bulk of NRIs, with the United Arab Emirates (UAE) emerging as the single largest destination with over three million Indians. Indians account for a third of UAE’s total population.

Some naturalized citizens and their descendants comprise the other category of persons of Indian origin (PIOs), estimated to be another 15 million people. This includes people in the old diaspora of the plantation world where PIOs make up a substantial part of the local population in Mauritius, Fiji, Trinidad and Tobago, Guyana, Suriname, Reunion Island, and to a much lesser extent in South Africa, Kenya and Uganda. NRIs and PIOs make up the Indian diaspora of around 30 million people, with the US hosting the largest stock (see chart).

In addition to the US being the most important diaspora destination, India itself has grown to become the second most important source of immigrants in the US, next only to Mexico. Indian emigration to the US has typically been high-skilled in nature, with student migration as the first step towards job placement and eventual naturalization. Political scientist Devesh Kapur and others have in a recent book dubbed Indians in the US as the “other one per cent", referring to the share of Indians in the American population as well as the high-income nature of their occupations.

Indian Americans tend to outperform other immigrant groups in virtually every development indicator. The hardening political stance on immigration in the US in recent years has so far had mixed effects. It has not dented student migration to a large extent, though it has made Canada and Australia far more attractive destinations for Indian students. But the Indian information technology (IT) sector is anxious about deploying workers on overseas tasks in the US and, above all, the professional lives of nearly a hundred thousand spouses, mostly women, lie under a cloud of uncertainty over specific visa regulations. Such a scenario may spark higher rates of return migration, which in the past has tended to be under 50% of the total volume of persons entering.

Canada, on the other hand, continues to draw in Indians under a more liberal immigration regime. In 2016, the Canadian Prime Minister Justin Trudeau went to the extent of making a formal apology in Parliament for the racism inherent in the 1914 Komagata Maru incident, when a ship carrying mostly Punjabi Indians was turned away from its shores.

Punjab’s historic affinity for all things Canada has also begun to change with an increased preference for, of all places, northern Italy, where over a hundred thousand migrants work in the dairy sector. Initially, a male-dominated emigration wave, this migration corridor has seen more women move to live with their husbands in remote Italian fields in recent years. Coupled with the Malayali migration of nurses to regions around Rome, Italy now hosts the second largest stock of Indian emigrants in Europe.

The UK continues to draw in the greatest number of Indians in Europe, mostly as students and professionals—a flow that may receive an even stronger boost with Brexit as it can substitute for the preferential access hitherto given to the European Union (EU) labour market. Outside the UK and Italy, Germany and France continue to attract Indian IT workers and Spain has emerged as a niche destination for Punjabi workers in the construction and catering sectors around Barcelona. However, they are not the traditional Jat Sikhs found in Italy or Canada, but belong to the Ravidassia community and symbolize a rare Dalit diaspora in an otherwise upper-caste Indian diaspora found across Europe and North America.

Meanwhile, India’s labour pipeline to the six Persian Gulf states of UAE, Saudi Arabia, Oman, Qatar, Bahrain, and Kuwait continues unabated. Muslims continue to be over-represented in this emigration stream and its regional composition within India has shifted from Kerala to the north. In recent years, more labourers have emigrated from Uttar Pradesh and Bihar than Kerala. Kerala’s fertility transition and reduced natural growth is one of the reasons for the weakening of its emigrant outflow.

The internal connections forged by waves of north Indian migrants heading toward Kerala has led to new information channels about opportunities to work abroad. But the Gulf story is no longer a labour-only story as a large number of professionals have also emigrated. Restrictive citizenship laws and harsh working conditions routinely make way to the headlines as in the past, but so do business connections, trading ties, and entrepreneurial ventures.

Singapore, Australia, and New Zealand are other parts of the English-speaking world that have witnessed a surge in Indian emigration over the past decade. The number of NRIs in China has crossed 50,000, many of whom are Sindhi traders creating economic ties with their bases in South-East Asia. Malaysia is that rare country with an old Indian diaspora intermingling with new migrant inflows. And in Africa, apart from East Africa and South Africa, countries like Nigeria in the West are attracting Indian traders and professionals in the tens of thousands.

Today’s Indian diaspora is more widely scattered than ever before and is drawn from several parts of India, even though central India and North-East India continue to draw blanks. The new diaspora is relatively more permanently settled in North America and Europe where it is also more gender-balanced and is less diverse in its caste composition than the old diaspora. These 30 million people spread across the world provide the ‘soft power’ for India’s foreign policy objectives and they are seduced periodically by the Indian government on the Pravasi Bharatiya Divas. On other days, it is the money sent back home that matters.

Remittance economy

International remittances have been an important source of foreign exchange for the Indian economy for four decades, with estimates of inflows ranging between 2-4% of gross domestic product. Typically ranked as the world’s largest recipient of international remittances, India annually receives a staggering $70 billion from overseas Indians, a financial bonanza that has overpowered previous concerns of a “brain drain". These flows include household-level transfers and withdrawals from NRI deposits.

Household-level transfers are mainly from the Persian Gulf countries, directed to specific emigration hotspots in India (see chart). Geographically, it overlaps with the contours of the great Indian migration wave’s origin points, along the west coast, northern Rajasthan, eastern Punjab, and the Bhojpuri-speaking Gangetic belt. An additional labour catchment area lies around Hyderabad. Emigrants are usually positively selected, which means that those with better education and incomes are more likely to emigrate than others.

The geography of NRI deposits, outstanding at $126 billion in 2018, is quite different. As per recent Reserve Bank of India statistics, over half of these deposits are concentrated in major metropolitan cities, with Mumbai accounting for the lion’s share of over $20 billion, followed by New Delhi, Bengaluru, Chennai, Hyderabad, Ahmedabad, and Kolkata.

Withdrawals from NRI deposits can be used for consumption but the high amounts suggest they are often invested in financial and real estate markets. This is reflected in the landscapes of these cities, with “Dollar Colonies" emerging to cater to the returning NRI, similar to the “Burma Colonies" of yesteryears. Real estate prices are, therefore, significantly affected by the presence of international migrant connections.

Equally illuminating is the source of these NRI deposits. The share of the six Gulf nations has risen from a third to a half over the past decade, while the share of North America and Europe has declined. The three leading sources are UAE ($33 billion), US ($16 billion) and the UK ($10 billion), marking a “U-turn" for Indian remittances (a turn away from the old diaspora frontier of Africa and South-East Asia).

These three countries are also the leading destinations for overseas direct investment, accounting for a third of the projects between 2003 and 2012. Overseas Indian foreign direct investment switched from the earlier origin points of South-East Asia and East Africa to West Asia (chiefly UAE), Europe (UK) and North America (US) over the course of the 20th century as business prospects followed the Indian emigrant trail.

The Gulf connection, for instance, has given rise to several Indians who feature in rich-lists: Yusuff Ali M.A. (retail), P.N.C. Menon (real estate), Ravi Pillai (construction) to name only a few. This U-turn is useful for the Indian economy at the aggregate level but only serves to concentrate the overseas Indian population in a few geographies, which might diminish their ability to serve as a globally dispersed engine of ‘soft power’.

Finally, to the extent that international remittances flow to the relatively more-developed states and richer people, it is likely to be a source for exacerbating regional and income inequalities in India. Mukerjee and Gini, the earliest known proponents of Indian mass migration, would not have looked on kindly.

Chinmay Tumbe is an economics faculty member at IIM-Ahmedabad and the author of India Moving: A History of Migration.

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Published: 28 Feb 2019, 05:28 AM IST
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