Wealth emigration is bad news for India’s $5 trillion dream – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-commentary/wealth-emigration-is-bad-news-for-indias-5-trillion-dream/articleshow/93060695.cms

Synopsis

Overall, 1,63,370 Indians gave up their citizenship in 2021. While this has been attributed to a backlog built up during the Covid-led slowdown, several of those seeking another abode include those who have built vast fortunes in India. On the face of it, India’s top earners should have little reason to forgo their comfortable existence here.

Anjana Menon

Anjana Menon

Founder, Content Pixies, and co-author of What’s Your Story? The Essential Business Storytelling Handbook

India is witnessing a great sloughing off. A record number of Indians gave up their citizenship in 2021. Leaving at the fastest pace in five years, Indians are in a hurry, and this includes the super-rich. This rings counter-intuitive to government assurances of better living, ease of doing business, robust economic growth and unprecedented opportunities. When even wealth creators feel the need to decamp, it signals that all may not be what it seems.

Overall, 1,63,370 Indians gave up their citizenship in 2021. While this has been attributed to a backlog built up during the Covid-led slowdown, several of those seeking another abode include those who have built vast fortunes in India. On the face of it, India’s top earners should have little reason to forgo their comfortable existence here.

According to a Global Wealth Migration Review, 7,000 super-rich Indians sought to permanently move abroad in 2020, making Indians only behind the Chinese super-rich who are relocating. Russians lag the Indians in this list. Historically, China and Russia have not been viewed as benign regimes. Their public image, of an embittered state that allows few political freedoms, is hard to erase. This tardy reputation has been captured in the clampdown on high net- worth individuals (HNIs) in both countries, especially those with the means to stand up against the state.

Alibaba founder Jack Ma, once China’s richest and most high-profile businessman, has been sidelined for criticising the state. His jet-setting lifestyle has been tamed and his ambitious plans to list the financial arm Ant Group, touted at the time to be the world’s biggest IPO, scuppered.

Russia, much before the Ant debacle, served up a similar warning after Mikhail Khodorkovsky, once its wealthiest businessman, was forced into exile in London, after doing jail time in his country. He alleged that the state persecuted him for calling out corruption and promoting an open society. His $15 billion wealth was whittled to a few millions in a matter of months.

In India, by contrast, its wealthiest have always stayed put and enjoyed a certain immunity. Those fleeing have mostly been defaulters and defrauders. Indian billionaires limited their overseas trysts to long holidays and holiday homes. After all, many of them reaped the benefits of decades of crony capitalism – from disproportionate access to resources, rules brokered to their advantage, freebies ranging from cheap land to tax concessions, easy bank loans and unbridled access to the power centre. In short, there has been no incentive to switch residences and give up a well-oiled machine that helped them grow rich.

So, the big rush to acquire a foreign residence can only mean that despite knowing how to work the system, India’s super-rich now feel vulnerable. As if to reinforce this, authorities scrutinising suspected economic offences have never been busier.

According to data released by the government, raids conducted by the Enforcement Directorate (ED) on alleged economic offenders have risen 26 times in the eight years since 2014. In the previous decade, there were only 112 raids. The value of the assets attached by the ED also went up from ₹5,346 crore in the decade ended 2014, to ₹95,432 crore since then.

Going by this, it would seem Indians are recklessly committing more economic crimes than ever before, despite higher digitisation that should make evasion tougher and far riskier. India’s flaccid opposition parties have, of course, alleged that GoI is merely using the powerful ED as a tool to buy submission. Critics also crib that some individuals whose assets have increased disproportionately have been left uninvestigated.

An enforcement agency that is legitimately bearing down on suspected illegitimate activities is a welcome move for law-abiding citizens. One could even argue that such action is long overdue. However, should these agencies turn into mostly a covert tool for leverage, it permanently damages India’s image of a relatively even-handed place to do business in.

For too long, India lost out because its brightest and best went overseas for better opportunities. To now grapple wealth emigration as opportunities abound is bad news for a government dreaming of a $5 trillion economy and an ever-expanding tribe of unicorns. If many of India’s wealth creators no longer see India as home, it will be even harder to convince outsiders to shift their businesses here.

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