Indian Immigrants and Global Knowledge Economy

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Indian Immigrants and Global Knowledge Economy

Prof. Bhagwati Prakash


The restrictions being imposed on Indian IT professionals by several countries, including the US, UK, Australia, Singapore etc., by denying visas to, in the name of saving jobs for native-born citizens are bound to prove counterproductive for them, as well as for the global economy as a whole. Every advance degree-holding as well as the skilled Indian immigrant, as a consumer, entrepreneur or executive in the host country, facilitates to generate twice more jobs for the native-born citizens, besides contributing in the net economic value, intellectual wealth and entrepreneurial ecosystem of the host economy

Immigrants from Bharat, constituting the knowledge based Indian dispora and serving across the world from Singapore in far east to the US in far west, have been visibly contributing for sustained progress and prosperity of the host countries, by adding net economic value, raising the GDP, creating extra jobs, intellectual wealth generating and nurturing entrepreneurial ecosystem for the host countries. Therefore, the restrictions being imposed on the immigrant technocrats and skilled manpower from India, by several countries these days would cause unwarranted slowdown in the host economies as well as dampen the overall economic growth worldwide. India-born people and persons of Indian origin, are largely behind the success of a host of multi-billion dollar multinational companies as well as countries with demographic deficit, as key executive, Chief Executive Officers (CEO) or as other professionals. The Indian CEOs of hundreds of companies like Microsoft, Google, Adobe, Soft Bank, MasterCard, PepsiCo, Citibank, Birkshire Hathway Insurance, Global Foundries, Cognizant, Net App, Herman International and so on, drawing hefty salaries between Rs 100-900 crore per annum, add several billions of dollars in the net worth and revenues of these companies and GDP of the host countries. In the US, even IPOs of those companies get more over-subscribed, which have Indian co-promoter(s). Thus the Indian immigrants constitute the core for economies as value adding talents in the host countries.

The industrialized as well as industrilising countries are equally dependent over Indian immigrant talent as well as skilled manpower for a broad spectrum of their knowledge based sectors, to sustain employment, maintain economic growth and balance in the trade. As per the latest available data on immigrants, provided by the World Bank and the UN, India leads the world in sending immigrant manpower worldwide, with an outflow of 26 lakh people in 2015 alone, followed by China (18 lakh), Columbia (14.5 lakh), Lebnan (12.5 lakh) and Pakistan (10 lakh). The biggest host country has been US, accepting 40 lakh in 2015 alone. There are countries, having unbelievably high percentage of immigrants in their total populations upto 80% and above, with all the riches and a very low rate of unemployment. The table 1 reveals that countries having very high ratio of immigrants in total population, have a very low unemployment rate. Therefore, the restrictions being invoked on the entry of Indian technocrats and skilled manpower is futile and would prove counterproductive.

Scores of studies reveal that immigrants do not kill the jobs in the US or any other host country. But, on the other hand immigrants help to create more jobs as consumers, entrepreneurs and executives in the host country. They also create huge demand for housing wealth into the country to trigger the entire construction value chain. A new research by Americas Society/Council of the Americas (AS/COA) and Partnership for a New American Economy (PNAE) has found that the 40 million immigrants in the United States have created $3.7 trillion in housing wealth to generate manifold turnovers and employment into several allied sectors and downstream or front end value chain. According to a 2011 study, immigrants with advanced degrees or even with some skill, after going to the US, even on temporary visas have created more jobs for native-born workers

The study of American Enterprise Institute and the Partnership For A New American Economy, has analyzed state-level employment data from 2000 to 2007, and found that every 100 foreign-born workers, working with advanced degrees had helped to generate additional 262 jobs for native-born workers. The study also found “that American States with greater numbers of temporary workers in the H-1B program for skilled workers and H-2B program for less-skilled nonagricultural workers had higher employment among US natives.” According to this study, the addition of 100 H-1B workers was associated with an additional 183 jobs for native-born workers, while the addition of 100 H-2B workers was associated with an additional 464 jobs for native-born workers. Moreover, it has also been found that the immigrants are more likely than natives to start their own businesses. According to a report from the Kauffman Foundation, “immigrants were more than twice as likely to start businesses each month than were the native-born in 2010.” Besides the immigrants fuel technological and scientific innovations. Even according to a report from the Brooking Institution, “the immigrants with advanced degrees are three times more likely to file patents

than the U.S.-born citizens. This higher probability of investments in new businesses as well as in generating intellectual wealth through research provide huge spillover benefits to U.S.-born workers by enhancing job creation and by increasing innovations”. Likewise a study of PwC and London First of immigrants in London reveals that each migrant worker in London alone, with full time jobs contribute an additional £46000 (equal to Rs 32,20,000)in gross value added (GVA) per year to the economy. According to this study, a combined total of £83bn for all of London’s 1.8m migrant workers is added, making up approximately 22 per cent of the British capital’s GVA. The additional value generated by 10 migrant worker jobs will support additional four jobs in the wider economy, according to this report.

owever, the migrants from Islamic countries, especially refugees, creating a rape scare and jehidi activities including suicide bombings in Europe etc. should not be clubbed with Indian Diaspora, the latter has been powering the economies of the host country. Even there are Nobel Laureates like Hargobind Khorana, Subrahmanyan Chandra Shekhar, Venkatraman Ramakrishnan, Amartya Sen. Who had migrated to US with Indian degrees and earned Nobel prize for their innovation. Indeed, from healthcare to space research and from FMCG sector to biotechnology and IT, the people of Indian Origin are the prime resource, not only for US but for several industrialized nations.

So, by ignoring to see the contribution of Indian diaspora, the countries ranging from Singapore to the US imposing restrictions, over Indian immigrants, would dampen their growth. It would less affect the bottom line of Indian Companies, than the domestic companies of the host countries opting to restrict immigrants from India. If the US proposal to double minimum pay requirement for the H1B visa to $ 1, 30,000 is enacted, it would severely affect the US corporate performance as well as the economy as a whole. Likewise Singapore has also recently stopped issuing visas to Indian IT professionals and in November last year, the UK government has also tightened visa rules, making it difficult for Indian IT professionals to work there. Recently, on April 18, 2017 Australia has also abolished the 457-visa category, in vogue since 1996 and allowing foreign workers to stay for 4 years permitting them to work in 650 occupations. Visa holders could also bring family members to Australia on 457 secondary visa. Now the government is replacing the 457 visa class with 2 new visas. One of them is a two year visa, which can be renewed for another two years and a 4-year visa targeted at specific high level skills. However, the overall protectionist restrictions being applied by countries deriving high economic value from the skills of Indian diaspora would no doubt hit the bottom lines of Indian as well the domestic companies of the host countries. These would also affect the remittances for India to some extent. But, the impact on the economies of host countries applying these restrictions would be much more severe.

Indian Diaspora is the world’s largest today, at 1.6 crore as per United Nation (UN)

According to the latest United Nations estimates, 244 million people, or 3.3% of the world’s population, have been living in a country different than the one where they were born. Their number is even growing at a faster pace than the growth in world population, with enormous economic, social civilisational, Cultural and demographic repercussions for the

C.L.Salvi ir native and adopted countries. Mostly, they are concentrated in just 20 countries. Indians make up the largest diaspora as 16 million Indians are spread across the world, which not only reflects the country’s demographic size (1.2 billion) but, it youth fullness with median age around 26 and top of all it constitutes the cream of talent to power those host economies. The effect of their absence can be enormous for those host economies. These, migrants tend to be mostly young, working-age people with high qualifications of high end skills, which can be a boon to countries like those in Europe where the native population is swiftly aging.

Estimates reveal that on account of superannuation alone in next 5 years, a demographic deficit of 57 million persons is likely to be felt by the industrialized countries alone for manning various knowledge based sectors. Out of which, 43 million would be available from India alone. Even today, if we take the case of IBM, it has 1.12 lac Indians working in India and 43000 in the US out of a workforce of 1 lac employed in the US. Thus in a total workforce of 2.12 lakh software engineers hired by the IBM in India and US, one lac fifty five thousand are Indians, working in India and US together. Since India is also a recipient of around $69 billion as private transfers i.e. NRI remittances. Therefore Indian think tanks and the Indian diaspora need to undertake and sponsor simulated studies with much more empirical support to elucidate the contribution being made by the Indian diaspora across the host nations, to dither the governments away from continuing these restrictions, as well as from imposing fresh restrictions. Indeed the private transfers of around $ 60-70 billion, made by the non-resident Indians (NRIs) from abroad to India is less than 10% of the net economic value being added into the GDPs of the economies of the host countries, wherever they have migrated. So their direct contribution to these economies in particular and the global economy in general is more than $7 trillion, almost around 10% of the global GDP