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Reverse Brain drain

Reverse brain drain in India, brain drain, india

1) What is brain drain?

Brain drain is defined as emigration of trained and talented individuals to other nations or jurisdiction for some benefit on long term or short term basis. This problem was phenomenal in India, especially in youth between 25 – 30 years of age.

2) What lead to brain drain from India?

Brain drain usually is due to one of the following reasons, social or political instability, collapsing economy, lack of opportunities etc. For India the reasons contributing to brain drain was no different.

Migration of Indians to various countries like America, and Europe was phenomenal during 1990’s. Jennifer Hansen, Population Analyst, states that immigration from India was at its peak (as indicated by the green line in the graph below during 1994 till 2000.

Further the report further states that 75% of these migrants consisted of youths of age between 25 to 30 years was at its peak during 1980 to 1997

Any phenomenal occurring always has a sequence of reasons behind it. Analyzing the reasons it was found that following were the basic factors to act as a catalyst to the process of brain drain

a) Economic Instability

Economic problems inherited at the time of independence were exacerbated by the costs associated with the partition and continuous exploitation at the hands of the British for 100 years. Government during that regime took up the important role of alleviating poverty, the economic model followed was to encourage industrialization and equalized distribution of money, but under state control. However this model turned into an impairment of productivity, quality and profitability due to heavy corruption, a by-product of the suppressed and exploited Indian economy.

Encyclopedia of Wikipedia states that growth rate till 1980’s was 3.1% a year in constant price or only 1% per capita. Industry grew at rate of 4.5% per year. Structural deficiencies, such as the need for institutional changes in agriculture and the inefficiency of much of the centrally directed industrial sector, also contributed to economic stagnation. Against this, there are better standards of living and finer research and work opportunities of the more developed country, enabling myriad possibilities of developing human potential.

b) Government driven economics and handling leading to

Corruption: - As government regulation of business was extended in the 1960s and corporate donations were banned in 1969, trading economic favors for under-the-table contributions to political parties became an increasingly widespread political practice.

During the 1980s and 1990s, corruption became associated with the occupants of the highest echelons of India's political system. Rajiv Gandhi's government was rocked by scandals, as was the government of P.V. Narasimha Rao.

Politicians have become so closely identified with corruption in the public eye that a Times of India poll of 1,554 adults in six metropolitan cities found that 98 percent of the public is convinced that politicians and ministers are corrupt, with 85 percent observing that corruption is on the increase.

Political instability: - Government control dominated the economic market and as a result, power was concentrated with a specific group of people called, the Bureaucrats. This lead to instability in the political system as well.

Back-to-back assassinations of the prime ministers Indira Gandhi and her son Rajiv Gandhi crushed international investor confidence on the economy that was eventually pushed to the brink by the early 1990s.

Till 1991, India still had a fixed exchange rate system, where the rupee was pegged to the value of a basket of currencies of major trading partners. India started having balance of payments problems since 1985, and by the end of 1990, it was in a serious economic crisis.

The government was close to default, its central bank had refused new credit and foreign exchange reserves had reduced to the point that India could barely finance three weeks’ worth of imports.
During the 1990s, at least 100,000 insolvent farmers committed suicide.[5] The Union government treasury reported annual revenue of almost £19-20 billion. The complete political system had gone for a toss.

3) Factors which initated reverse brain

a) Reforms taken up by the government

The government rule headed by Mr. Narasimha Rao initiated number of policies to bring about a change in the political and economical reforms in the country.
In association with Dr. Man Mohan Singh, who was appointed as a special economical advisor for economic reforms the policy of liberalization and open trade was introduced.
The reforms did away with the License Raj (investment, industrial and import licensing) and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors.[24] Since then, the overall direction of liberalization has remained the same, irrespective of the ruling party
National Democratic Front led by BJP, was in helm of economic affairs from 1998-2004. During this period. The main economic achievement of the government was the universal license in telecom field, which allows CDMA license holders to provide GSM services and vice versa. NDA started off the Golden Quadrilateral road network connecting main metros of Delhi, Chennai, Mumbai and Kolkata.

The project, near to completion now, was one of the most ambitious infrastructure projects of independent India. Simultaneously, North-South and East-West highway projects were planned and construction was started.
Education was made a fundamental right by amending the constitution of India and huge amount of money was pumped into the project under the name of Sarva Shiksha Abhiyan. This project met with limited success.

b) Growth in Indian Economy

Development of the IT industry in India, opening-up of banking sector, privatization of non-profit making firms of the government, and increased FDI resulted in the break-even point for Indian economy. India developed itself as a center of outsourcing in the IT Industry. Cheap labour and supportive government policies ushered manufacturing industries like never before.
This turn-around led to the introduction of large industries in India, it opened the market for employment. Per capita income increased, growth rate swelled up. The time was now ripe for infrastructural development in all areas, along with easy availability of water through Narmada, and widespread education drives in India.
The economy of India, measured in USD exchange-rate terms, is the tenth largest in the world, with a GDP of US $1.50 trillion (2008). It is the third largest in terms of purchasing power parity. India is the second fastest growing major economy in the world, with a GDP growth rate of 9.4% for the fiscal year 2006–2007. However, India's huge population has a per capita income of $4,542 at PPP and $1,089 in nominal terms (revised 2007 estimate).

c) Standard of living and quality of education has improved in India

As per survey conducted by business standards monetary compensation of the Indian high-skilled labour has shot-up by almost 2 to 3 times. The standard of living and quality of education are improving
With the onset of privatization the problems faced because of a bureaucratic government and a widespread public-sector, have tremendously been mitigated.
For example, easy availability of loans, ease in paying bills and internet banking. Previously getting telephone connection was considered to be a rare luxury in India, now even children move around with a cellular phone.

With opening in banking sector many private players like ICICI, IDBI, City bank, etc, in addition to government banks brought finance at your door steps for offering money to build a house, for personal occasions, for starting business for higher education, thanks to globalization again.

Car worth a lac rupee was never dreamt of and is now a fact.
A survey conducted by Sify on 11th June Tuesday states that “Contrary to the situation in 1990’s where telephone connections earned you credit in the society and coasted you a couple of rupees and long lead time, there are more than 7 million mobile users in a single city in India. Mobile users in a metropolitan is increasing at a rate of 0.275million per year”

6) The Reverse Brain Drain

Recent study conducted by the Times of India states that “Due to the booming Indian economy and improved standard of living India has started to win back the drained brains”. The analyst define this process as Reverse Brain drain

Researchers from Harvard, Duke and New York University on Wednesday released an analysis of international patent filings have clearly stated that “Due to flawed immigration policies, valued and well-trained officials are moving towards India and China”

Further this report has released the figure of 60,000 immigrants from USA returning back to India in a year. It is forecasted that one of five new immigrants and one of every three highly skilled employees are bound homewards.

This is just not the end!!!!!!!

Look at the future prospects

a) Economic Growth

International finance hub developing in Gujarat, Mumbai, India will start operating by 2010.

IT Industries expanding in all corners of metropolitan countries will cater to the need of world’s IT industry. For example, Infosys in Mysore is expanding its set by will see a built-up space of six million sq ft with a capacity to train 35000-40000 people every year. ...

Indian Railways expected to grow in quality and quantity by two times the current value, by the end of 2010, states the railway minister Mr. Lallu Prasad Yadav.

Government is open to foreign investment, friendly export policies (export duties are kept 0% to promote exports), reduction in taxes and duties (customs duty reduced from 34% to 30%) have encouraged people to increase their earnings.

Progress rate is targeted in double figures by 2010.

Per capita income growing by an average rate of 8%. It is forecasted to become four times by 2020.

Foreign Direct Investment through financial collaboration, through joint ventures and technical collaborations, capital markets, private placements are expected to increase by around 30%.

With all the above actions, Goldman Sachs predicted that India's GDP in current prices will overtake France and Italy by 2020, Germany, UK and Russia by 2025 and Japan by 2035. By 2035, it was projected to be the third largest economy of the world, behind US and China.

b) Better Living Style

As per the reports published in Business Standard, the power sector, automobile industry, agro industry and infrastructure industry are expected to have unprecedented growth. Investment in this sector is increasing at the rate of more than 20-35%. This gives a clear indication that the standard of living of Indian community is on the verge of a tremendous improvement.

With revolution in the communication industry, mobiles have become a common commodity of use, indicating a very fast and integrated network amongst Indians.

As per the reports published by electricity boards, electricity consumption is expected to increase by 50%, which clearly indicates more and more availability of automated and luxurious appliances.

Automobiles sale is expected to increase by 25% indicating a better standard of living.

There is an ongoing Increase in the number of universities and international schools in India which has lead to easy availability of quality international-level education in the country.

C) Change in Social Attitude

Model of Indian social structure followed since many years entrusted the male member of the family with the duty of working outside the house and a female member to remain at home and take care of the domestic issues. With globalization and exposure of Indians to the world, there is a good change in this mind-set.

Slowly, even females are stepping out of the house, educating themselves, realizing their abilities and getting financially independent. The number of females working is forecasted to increase. Moreover employment market is booming, this will give educated couples the power to work as well as earn more in India. This will lead to increase in the family income, while securing financial independence.

The youth of today look forward to work together irrespective of the sex. Indian culture is becoming more industrious, open-minded and welcoming.

d) Turn around in the economy of developed countries

On the other hand, in developed countries, growth rate is not more than 3 to 5 % per year. The life is steady there. Moreover flawed immigration policies, and collapsing economies in countries like the US, has lead to a strong trend of skilled officials returning to India. In this reference, Mr. Dewang Mehta, president OF NASSCOM, a New Delhi based software lobby group says, “It’s fantastic, they’re bringing back the money and they’re bringing back the business contacts.”

7) Conclusion

This is just the beginning of the trend, within next five years, it will be very common to have our NRIs back in the country as well as people from all parts of the world on the territory of India as employees of various Indian firms.

“Bharat Nirman is on its full-fledge move” as the latest project of Government of India says. 5 years down the line, we may see Bharat as an emerging employer for all high skilled officials around the world.

8) Reference

1)Times of India
2)Wikipedia encyclopedia
5)Report on Immigration trends from Jennifer Hansen, Population Analyst
Published: 2008-04-29
Author: Abhipsha

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