|HOME | NEWS | COLUMNISTS | ASHOK MITRA|
February 12, 2001
Is it not time to prick the NRI bubble?
The new Brahmins in Indian society are the tribe who pass as NRIs, the non-resident Indians. They have, as a matter of fact, ceased to be Indians: they have travelled to other shores and taken up citizenship there. Technically they are therefore non-Indians.
But, so what? They have, according to legend, made money, piles and piles of money, while pursuing careers abroad. There is a gleam in the eye of our politicians and administrators: if only these former children of the soil would benevolently agree to invest a part of their savings for the development of India, then milk and honey would start flowing in this country.
Foreign investment is, in the view of our policy-makers, the key element in economic development; bounty from external sources will lead us to paradise. And, in this scheme of things, funds contributed by the NRIs would play a crucial role.
After all, in China, till very recently, more than three-quarters of direct investment flowing in from overseas were from non-resident Chinese -- those from Hong Kong, Singapore, Malaysia, Indonesia, the United States, Canada and western Europe. China has now attained a rate of growth of gross national product averaging 10 to 12 per cent per annum largely because of foreign investment, which has of late touched nearly 50 billion dollars.
If China could achieve this miracle, why should we, who have a civilization almost as ancient as China's and who too have millions and millions of compatriots living abroad, lag behind? Is it not a matter of shame that as against the gigantic inflow of investable funds from the overseas Chinese, in our case the contribution of NRIs is only around two billion dollars annually? The NRIs are no less patriotic than the overseas Chinese. If only we treat them with deference and regard, we ought to be able to achieve the same scale of success, as China has done, with compatriots settled overseas.
This consideration provides the major pretext for the regular annual trek of our ruling politicians -- prime minister and chief ministers including -- to foreign countries. Of course, we are keen on foreign direct investment from transnational corporations and such like, but we also want this flow to be satisfactorily augmented by generous contributions from our non-resident brethren. They are, after all, flesh of our flesh.
Apart from importunating trips overseas year in and year out, our politicians, civil servants and chambers of commerce organize conferences and seminars in metropolitan cities and elsewhere where NRIs are honoured guests. The latter are pampered and showered with sycophancy of the most lurid description. These celebrities have made it good in foreign lands, they would now kindly see to it that those of us who were not fortunate enough to join them abroad could lead a better life back home; this will be possible only if they bring a part of their money home and invest in this or that development project.
There is near unanimity in the country's higher counsels that the NRIs must be accorded extra-special treatment, they must be offered industrial sites at low or zero cost, power connections must be arranged for them on a priority basis, the bureaucratic formalities must be curtailed, or, rather, waived in the case of their investment proposals.
For example, state governments should acquiesce to grant sales taxation holiday for five or ten years. We have, of course, special bank deposit schemes which permit funds kept by NRIs to be offered fantastically high interest rates and the deposits are also offered full repatriation in foreign exchange at the shortest notice.
These dispensations, tailor-made for them, are apparently still not fully satisfying the NRIs. They are Oliver Twists of a very special genre: those who have more insist on being given even more. A standing demand of the NRIs is that they be accorded the privilege of double citizenship; that is to say, while they might be citizens of the US or some other foreign country -- enjoying full civil rights, including voting rights, over there -- they must enjoy identical rights in India too.
Maybe they or their parents had once deserted India, maybe they do not consider India to be worth living in; nevertheless, since we Indians fervently hope and pray that they lend us their money, we must, as quid pro quo, offer them dual citizenship. They must enjoy the same rights as Indian citizens do, apart from the prerogatives they enjoy as foreign citizens.
To elaborate the point, in addition to other privileges, they must have the right to vote in Indian elections and even contest these elections, which would enable them to become ministers, and prime ministers as well, in this godforsaken land they had once deserted.
Our government is embarrassed. It is aware of the complications involved in allowing dual citizenship to NRIs. Every now and then, the matter is therefore officially stated to be "under active consideration." Diplomacy comes to the fore; none in authority dares to annoy or alienate the NRIs. They, along with other foreign investors, are our lifeline to blessed, heavenly existence.
Is it not time to prick the NRI bubble? The data, extracted from the Reserve Bank of India Bulletin, November 2000, are revealing. After reaching the peak of 3.6 billion dollars in 1997-98, the FDI inflows, it says, have shrunk to barely 2.1 billion dollars in 1999-2000; from the trend for the first five months of the fiscal year, the performance is unlikely to be any better in 2000-01.
Even more interestingly, while in 1991-92 -- the first year of the so-called "reforms" -- NRI investment in total FDI was 48.8 per cent, this proportion has tumbled down in the course of the decade. In the two most recent years, 1998-99 and 1999-2000, the proportion has been 2.6 and 3.9 respectively; for the first five months of 2000-01, it is as low as 3.2 per cent.
The data establish two points. First, the sell-out of the country's economic policy, lock, stock and barrel, to foreigners has not led to any significant increase in FDI in the country. It is currently wobbling around 2 billion dollars per annum, in contrast to China's magnitude of close to 50 billion.
The second fact is even more telling. Our worship of NRIs has been of little or no avail, the NRI investment is a dwindling particle in a shrivelling corpus. The NRIs are always asking what we can do for them; they are not interested in doing anything for us.
A suspicion looms large. Perhaps in the nineties, particularly in the years 1991-92 and 1994-95 to 1997-98, the NRI inflows were mostly a reflection of hawala transactions. A certain sum of black money was sent out of the country via the hawala route to foreign lands. This money subsequently returned to the country by the much-applauded NRI route. As direct tax rates within the country were progressively lowered at the urging of the "reforms" enthusiasts, the incentive for taking resort to the hawala-cum-NRI device also withered.
Even more alarming, the authorities are not seemingly at all interested in tracking the end-use of the money that comes in under the garb of NRI investment. A number of projects is approved for NRI funding at the Central level, but once the funds come in, the authorities, including the RBI, claim that they have no way of tracing the destination of these funds; this is equally true for FDI inflows.
After their arrival, the funds disappear as investment on the ground in the different states, with regard to which no Central data are reportedly available. The bulk of the NRI money, it is therefore altogether possible, returns to the black market and adds to the circulation of illegal money in the country. Black thou art, to black thou returneth.
The standing parliamentary committee on industry has been imploring the Union government to prepare data on the actual disbursement of FDI and their end-uses. The authorities have continued to prevaricate in the matter. Who does not know that the NRIs comprise some of the best friends of the ruling politicians? They contribute funds in the election season and act as conduits for laundering money dishonestly earned in the country. Therefore, please ask no questions, and you will be told no lies.
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