Beyond drawing back NRIs

Let me return to the question I posed at the end of this column last week: Even if India is a net beneficiary from global flows of brainpower, will we not be still better off if skilled Indians do not migrate?

Obviously yes, some will say. I disagree. The Berlin Wall was a classic attempt to prevent skilled people from migrating. In many ways the people of East Berlin were better off materially and less oppressed than large sections of Indian society. Most East Berliners who climbed the Berlin Wall did so to enjoy higher living standards in the West, not for ideological reasons. The same is true of skilled Indians leaving for the USA. A country needs to create conditions that induce citizens to stay at home instead of migrating. If it does not, people are entirely justified in leaving.

Brain drain is a bogus concept. Capital is a resource, no less than brainpower. When we ask the USA to invest in India, should Americans complain that this is a drain of American capital? Should they say that all American capital should be invested only in the USA? Should they stop all imports on the ground that this will be a foreign exchange drain? No, they need to understand that interdependence is better than isolation, that the world as a whole is better off when human beings and capital go to places where they are best used.

But the main issue is far bigger. Of the skills we acquire in a lifetime, very few are acquired at college. Most are acquired on the job. If a country lacks an economic climate that demands and rewards skills, even the greatest talent will atrophy. Keeping scientists in India will not keep skills at home, it will prevent scientists acquiring skills by working globally.

Scientists like Chandrashekhar and Khorana migrated to the USA, flourished, and won Nobel Prizes. Had we kept them in India, they would not have had the facilities or intellectual climate to develop their enormous skills. Their talent would have been wasted. India should send its talent to any place in the world where it can flourish, and then reap the dividends of the global flow of knowledge.

Consider our computer software, India’s pride and joy. The truth is that it was created largely in the USA, and could never have come up otherwise. Our software potential was recognised back in the 1970s, yet nothing happened for decades. Why? Because software skills can be developed only where there is a culture of aggressive computerisation to serve customers better. But the licence-permit raj in India killed competition and a culture of service to the consumer. Neither the public nor private sector had any incentive to computerise.

Narayan Murthy of Infosys recalls it took him years to get a telephone connection or import licence for a computer in the 1980s. Look at the banking industry agreement negotiated by trade unions in 1993, two years after reforms had supposedly begun. The agreement said bank branches would be computerised at the rate of 0.5 per cent to 1 per cent annually. That is, full computerisation of banks would take 100 to 200 years! Obviously software skills could not grow in such a climate.

But meanwhile a novel way was found of converting Indian potential to actuality: body shopping. In this, Indian engineers were hired on short contracts to work on software projects in the USA. On the job, they picked up vast new skills that they brought back.

Body shopping built the foundation of skills from which India has been able launch its software industry. Seen in this light, the Indian software industry was made in the USA in substantial measure.

It could never have been made in India alone. Even today, half our software exports are from body shopping. Today, at long last, India is finally computerising, and competition is driving domestic demand for software. Hurrah. But always remember that this pool of skills grew despite and not because of sensible domestic policies.

Prime Minister Vajpayee said at the recent NRI jamboree that India should create conditions that attract back migrants. All of us will agree heartily. But if indeed we do something so fabulous, the return of NRIs will be a very tiny part of the benefit. The main gainers will be those who never left India. We need to create a system where talent and creativity thrive, instead of being castrated by the power of money and influence. Once we do so every Indian will be a gainer. The capital and talent of the whole world, not just that of NRIs, will flow to India.

What do you think?