By Dr. P. Sekhar
Chairman, Global Smart Cities Panel & Micro Tech Global Foundation
Remittances give countries the ability to fund development in their own way. India retained its position as the world’s top recipient of remittances with its diaspora sending a whopping US$80 billion back home in the last year. An estimated 31 million Indians were living abroad now, they provide a variety of economic benefits to the home and host countries. Indian talent has been much acclaimed all over the world and able to send talented work pool to meet the need of global knowledge skills. Secured Governance strategy says that every year India can encourage and set out 3 million overseas population outside the country and get more than US$10 billion additional remittances.
The Indian diaspora is around 31 million. While it is only 2.25% of India’s population, their total wealth is estimated at US$1 trillion which is nearly over half of India’s GDP. Of the US$1 trillion, one-half is estimated to be financial assets. The income of the Indian diaspora is estimated at US$ 400 billion a year.
Indian overseas people can set up financial services. The financial institution can support fund transaction services for an affordable percentage of remittance for Indian diaspora and other countries. Moreover, these institutions can offer easy credit access to boost the economic growth of host countries.
.Configure Indian law enforcement services in emphasis with approval of the host country and ensure that the force activity could help them to maintain law and order in case of any Indian person commit crimes in their territories. If a person from India committed an offense in other countries, he will be penalized as per the host country’s law and punishment will be held in the home country. There is no way to escape from punishment.
The overseas population needs to be encouraged in “Technology transfer cum Investment” with the latent potential of India.
The Overseas Indians still maintain strong cultural and social linkages with India, through food habits, social mores, marriages, Bollywood, etc.
India continued to be the world’s top recipient of remittance from its diaspora, by the end of December 2018, Indians are expected to send a whopping US$80 billion back home, making India the highest recipient of remittances in the world. Significantly, the total remittances are estimated to be equivalent to 2.8% of India’s GDP and 12% of total remittances world over. Global remittances touched US$689 billion-mark. Global remittances are expected to grow by 3.7% to US$715 billion in 2019.
The population of Overseas Indians was 30.99 million (13.11 million NRIs & 17.88 million PIOs) in 2018. Skills and knowledge are the driving forces of economic growth and social development for any country. India is blessed with 65% of its youth in the working-age group. In next 20 years, the labor force in the industrialized world is expected to decline by 4%, while in India it will increase by 32% which creates a need and opportunity to provide its workforce with required skill sets and knowledge to enable them to contribute substantially to the economic growth of India
[Note: PIOs – Persons of Indian Origin, NRIs – Non-Resident Indians]
REMITTANCE FLOWS & COSTS
IMPORTANCE OF DIASPORA TO INDIA
The Indian Diaspora is a generic term to describe the people who migrated from territories that are currently within the borders of the Republic of India. It also refers to their descendants. There are three categories of overseas Indians.
- NRI’s: Indian citizens staying abroad for an indefinite period for whatever purpose (Majority in Gulf).
- PIO’s: Overseas Indian who has become a citizen of the countries of their settlement.
- SPIO: Stateless Person of Indian Origin have no documents to substantiate their Indian Origin (Majority in Myanmar and Sri Lanka).
In the age of economic slowdown, India is passing through a bad phase and its monetary condition is severely affected. The inflation rate is high and people are unable to manage their daily life. In this context, the Indian government has great expectations from millions of Non-resident Indians to resolve the crisis by making investments in India. In 2019, only 46 million people out of 1.3 billion people need to enhance lifestyle and bring into prosperity. Though India has enough natural resource but has not enough capital to exploit them and progress the economy. For this, India depends on external investments. While NRIs generate earnings is estimated to be US$250 billion and is one-third of the GDP of India.
OVERVIEW OF NRI INVESTMENTS IN INDIA
The present-day scenario for NRI investments presents a stark contrast to those heady days of the 1990s when NRI investments were actively wooed.
Interest rates in India have fallen drastically over the last decade, reducing the spread available for NRIs investing in India. This has been further aggravated by the fact that the interest rates offered on NRI deposits today are no longer at a substantial premium to the rates offered to domestic investors. Gone are the days when banks would offer 16% to an NRI on NRNR deposits – today he would be lucky to get 7%. Even the exchange control laws for investments by NRIs put NRIs almost on the same footing as other non-resident foreign citizens or entities. Overseas Corporate Bodies (OCBs – companies owned more than 60% by NRIs) is now a dirty word so far as the regulatory authorities are concerned, and stand on the same footing as other foreign companies. The avenues of investment available have narrowed down to just a few. There have even been attempts to tax the meager interest currently being paid on NRE and FCNR (B) deposits.
At the same time, the taxation provisions for residents, in general, have been significantly liberalized. Dividends and mutual fund income distributions are no longer taxable, long term capital gains on the sale of shares and equity-oriented units are exempt, short term capital gains on such investments attract only a 10% tax. Viewed in this backdrop, the special tax benefits to NRIs are no longer attractive.
GLOBAL TALENT CRUNCH
A major crisis is looming over organizations and economies throughout the world. By 2030, the expectation for skilled workers will outstrip supply, resulting in a global talent shortage of more than 85.2 million people. Signs are already emerging that within two years there won’t be enough talent to go around. In countries with low unemployment and booming manufacturing production, including the Czech Republic, Poland, Hungary and Slovakia, a labor shortage has already accelerated automation and increased use of robotics—not to replace people, but because there aren’t enough of them to fill the factories.
Left unchecked, the financial impact of this talent shortage could reach US$8.452 trillion in unrealized annual revenue by 2030, equivalent to the combined GDP of Germany and Japan. The United States alone could miss out on US$1.748 trillion in revenue due to labor shortages, or roughly 6% of its entire economy. While leaders are betting heavily on technology for future growth—as per survey report says that 67% of CEOs believe technology will be their chief value generator in the future of work—they cannot discount the value of human capital. Even companies that are using more robotics foresee a growing need for human talent with advanced skills; for example, redeploying people from the factory floor, where robots can perform repetitive work, to the research laboratory. The problem, however, is the mismatch between technological advances, including automation, artificial intelligence (AI), and machine learning, and the skills and experience workers need to leverage these advanced tools. Technology cannot deliver the promised productivity gains if there are not enough human workers with the right skills. This has set the scene for a global talent crunch.
The talent crunch, as modeled in this study, refers to the gap between talent supply and expectation at three critical milestones: 2020, 2025, and 2030. Despite the risk, by examining the scale, impact, and timing of the talent crunch and what it means for organizations over the long term. The global growth, demographic trends, under-skilled workforce’s, and tightening immigration mean that even significant productivity leaps enabled by technological advances will be insufficient to prevent the talent crunch.
More granularity, we examined talent supply and demand in each of the 20 economies as a whole and within three major knowledge-intensive industries—financial and business services (including insurance and real estate), technology, media, and telecommunications (TMT), and manufacturing—and at three distinct skill levels, referenced throughout as:
- Highly skilled workers (Level A): These individuals have completed post-secondary education, such as college or university, or a high-level trade college qualification.
- Mid-skilled workers (Level B): These individuals have attained upper secondary education, such as high school, or a low-level trade college qualification.
- Low-skilled workers (Level C): These individuals have less than upper secondary education.
The scale and impact of the talent crisis at each milestone in terms of skilled employee shortages and what they imply in terms of lost opportunity for value creation. For instance, the United States financial services sector will suffer the most from stunted growth due to lack of talent, with US$435.69 billion in projected unrealized economic output, equal to about 1.5% of the country’s entire economy.
For the all-important technology sector. a labor-skills shortage will reach 4.3 million workers by 2030, or 59 times the number of employees of Alphabet, Google’s parent company. On the positive side, India is projected to have a skilled-labor surplus of around 245.3 million workers by 2030, the only country in our study expected to have a surplus, owing mainly to its vast supply of working-age citizens and government programs to boost workers’ skills. Fortunately, there is time to mitigate the risk. Governments and organizations must make talent strategy a key priority and take steps now to educate, train, and upskill their existing workforce.
By 2030, we can expect a talent deficit of 85.2 million workers across the economies analyzed—greater than the current population of Germany. The shortfall of Level A workers could equal 21% of the highly skilled workforce of the 20 countries in our study. India is the only country analyzed that can expect a talent surplus, driven by a burgeoning working-age population.
This global skills shortage could result in $8.452 trillion in unrealized annual revenue by 2030—equivalent to the combined GDP of Germany and Japan. The impact of the talent crunch is so significant that the continued predominance of sector powerhouses is in question, from London as a global financial services center to the United States as a technology leader to China as a key manufacturing base. As a result, organizations may be prompted to relocate their headquarters and operational centers to places where the talent supply is more plentiful. Governments will be forced to invest in improving their people’s skills to avert corporate flight and to defend their nations’ income and status.
INDIAN INVESTMENT ABROAD – OVERSEAS DIRECT INVESTMENT BY INDIAN OVERSEAS PEOPLE
Outbound investments from India have undergone a considerable change not only in terms of magnitude but also in terms of geographical spread and sectoral composition. Analysis of the trends in direct investments over the last decade reveals that while investment flows, both inward and outward, were rather muted during the early part of the decade, they gained momentum during the latter half.
There has been a perceptible shift in Overseas Investment Destination (OID) in the last decade or so. While in the first half, overseas investments were directed to resource-rich countries such as Australia, UAE, and Sudan, in the latter half, OID was channeled into countries providing higher tax benefits such as Mauritius, Singapore, British Virgin Islands, and the Netherlands.
Indian overseas people invest in foreign shores primarily through Mergers and Acquisition (M&A) transactions. With rising M&A activity, companies will get direct access to newer and more extensive markets, and better technologies, which would enable them to increase their customer base and achieve a global reach.
Due to its large diaspora and overseas expats population, India consecutively remains the top receiver of remittance, e.g. with US$80 billion in this year, US$65.3 billion (2.7% of India’s GDP) in the previous year.
Most of the Indian laborers and workers abroad are highly skilled and professional enough to deserve great pay. By 2025, India’s demographic dividend is expected to contribute 25% of the global workforce. They can be made more effective by defining linkages, effective response mechanism, and dynamic feedback systems.
India is projected to have a skilled-labor surplus of around 245.3 million workers by 2030, the only country is expected to have a surplus, owing mainly to its vast supply of working-age citizens and government programmed to boost worker’s skills.
We have the opportunity to capture a greater share of the world’s labor-intensive manufacturing jobs. India could capture a greater global opportunity in technology and other knowledge-intensive fields.
Secured Governance Strategies for National growth
- Every year more than 3 million people encourage to work in abroad and attract 1 million skilled force from other countries to India;
- Near about US$10 billion (INR.62,703.4 crore) remittance expected through this additional 3 million overseas population;
- Indian expatriate set up financial institutions for financial transaction services and economic growth of host countries;
- Gaining knowledge and using it effectively is essential to ensure continuous improvement in the standard of skill development institutes;
- Enhancing individual’s employability and ability to adapt to changing technologies and meet global employee market demands.
- Improving productivity and living standards of the people.
- Develop a high-quality skilled workforce/entrepreneur relevant to current and emerging global employment market needs;
- Attracting investment in skill development;
- Set up law enforcement services in Indian emphasis with the permission of host countries to assist them to maintain their laws and policies in case if any Indian who involved in crime.
Prefer workers and students from India for training and improve their employability or skills to meet global employee shortage.