Washington: After the noted ‘reverse brain drain’ of talented Indians who have returned home from Silicon Valley to fuel the country's tech boom, the money has now begun to follow the people, more quietly, the American newsmagazine Newsweek said.
Newsweek International reports the story of India and its diaspora, likening it to "a Bollywood script about two brothers, the younger one rich and successful, the older one poor but closer to the family. And now, not too late in life, they are reconciling."
As recently as a decade ago, overseas Indians were viewed either as cash cows to be milked or as traitors who'd taken their highly subsidised education and abandoned the motherland to get rich abroad, it said in its forthcoming November 13 issue.
As India has evolved from agrarian torpor to high-tech vibrancy in recent years, the country has also begun to re-evaluate its relationship with its expatriates, it said.
At the same time, members of the diaspora have begun looking homeward for the same reason they originally left - the pull of economic opportunity.
"The mindset of India changed in the 1990s," it said, citing author Gurcharan Das, whose book India Unbound charts the country's rise. "The minds of young Indians, especially, became decolonised," it added.
Though overseas Chinese, not to mention overseas Filipinos and Mexicans, are much more famous for sending cash home, Indians now lead the world in this category.
According to the World Bank, cash remittances from Indians abroad have more than doubled since 1995, and totalled $22 billion last year.
China, at $21 billion, was close behind, it said, noting that over the past decade India's aggregate remittances totalled $154 billion - about 50 per cent higher than what China received from its much larger diaspora.
With more than 20 million Indians overseas, including 200,000 millionaires in the US alone, the diaspora could be a critical weapon for India in its effort to catch up to its archrival, Newsweek said.
A recent JPMorgan report says the diaspora is becoming "a powerful catalyst in helping India realise - perhaps even exceed - its aspiration toward 10 per cent annual GDP growth."
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Aside from remittances, the stock of bank deposits held by non-resident Indians, many of whom bank money in India to take advantage of preferential interest rates, topped $32 billion last year, accounting for a whopping 23 per cent of India's foreign exchange reserves.
These large inflows have helped protect the value of the rupee and dampen inflation in a nation that, unlike China, runs a trade and government deficit.
And while it's not clear how much of the foreign money flowing into the Bombay Stock Exchange comes from overseas Indians, local traders assume the NRIs account for a good share of the incoming money that has driven up the market 300 percent since 2003, Newsweek said.
Over the same period, the Shanghai market has stagnated due in large part to China's reluctance to open it to hot money from any overseas source.
Newsweek noted other critical differences between the Chinese and Indian diasporas.
Due to the fact that overseas Chinese are concentrated nearby in places like Hong Kong, Singapore and Taiwan and largely earned their wealth in manufacturing, they're both better situated and more motivated to make direct investments in factories on the mainland.
In contrast, India's post-independence emigrants were mainly professionals - doctors, lawyers, scientists and engineers - or small shop and hotel owners, settled in countries far from India. Until recently they had neither the expertise nor the impetus to invest in their homeland.
That's a big reason, it says, citing JPMorgan analyst Rajeev Malik, that to date overseas Chinese have sunk far more than their Indian counterparts have into new factories back home.
The overseas Chinese contributed as much as half of China's foreign direct investment in the 1990s, while overseas Indians chipped in only about 10 per cent of India's much smaller total.
In 2000, for example, overseas Chinese pumped $32 billion in FDI into China, compared with $200 million for Indians. But this, too, is changing, Newsweek said.
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