The Great Indian Brain Drain, and Nothing to Come Back To

The slow pace of job creation will hamper India’s efforts to stem brain drain.

Over the years, millions of young talented Indians from various disciplines have left our soil in search of better opportunities. This is what is termed as “Brain Drain” and policymakers have been grappling with this issue for a long time.

It is well known that the consequences of brain drain are severe, especially for a developing economy like ours. It adversely affects the quality and quantity of human capital formation, which is the bedrock of modern economic development.

A higher number of Indian students, professionals, doctors, and scientists are working abroad now than ever before. On the other hand, the money they are sending back to our country (as remittances) is declining. There is an urgent need to revisit the problem and find new and innovative solutions to reverse the trend quickly.

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Fall in Remittances

One of the arguments used as a shield against the critique of brain drain is that it brings in money to our country, especially directly into the households, as remittances. The fact, however, is that in recent years the outward migration has increased and remittances have fallen.

The US can be considered a reliable sample when gauging brain drain because over half of all emigrants from India settle down in the States. It is the number one destination for high-skilled emigrants from most developing countries in Asia, including China, South Korea and Vietnam.

There is even a joke cracked often that in Silicon Valley, the most spoken languages are Hindi and Telugu.

Data tells us that there has been a steady rise in the number of people migrating to the US over the last decade and the rate is increasing. There has been a 225 percent increase in the number of people migrating to the US for education, work or permanently since 1999 from 1,37,230 to 4,45,281 in 2015.

In fact, the pace has picked up since 2009. On the other end, though India stands on top of the world in absolute numbers for remittances, there is a declining trend evident recently.

Even when we consider total remittances received by India as a percentage of GDP, the number has declined from about 4.2 percent in 2008 to 3.2 percent in 2015. Therefore, it is clear that as more and more people are leaving the country, the income inflow from abroad is gradually decreasing.

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Wage Gap

A major reason why India’s young, skilled labour force leaves is in search of better rewards for their effort and talent. When seen in the context of the Purchasing Power Parity (PPP), average wages for a person in the US is more than six times of his Indian counterpart in the academia, more than three times in management and more than double in the IT sector.

Quality of Higher Education

Are wages the only major reason why youngsters migrate abroad? The simple answer is no. Quality of higher education in India is one of the other factors which pushes brain drain. India, having come a long way in almost ensuring every kid goes to primary school, lags behind the developed world in terms of quality higher education.

We proudly pat our backs for the IITs and IIMs we have established, but do we know that none of them appear in the top 200 universities in the world?

The Indian Institute of Science, Bangalore was the highest ranked Indian university at 201st position.

Are There Enough Jobs?

While it is important to understand why people leave and its adverse impact on our society, it is equally important to ask the question – if our talented youngsters decide to stay back or come back from abroad, does our system have the capacity to absorb them?

The answer again is unfortunately no. Our job market has not expanded enough to accommodate the high skilled job seekers and reward them with global competitive salaries. In fact, to the contrary, the pace of job creation itself has slowed down in India in recent times.

The labour bureau job creation data with a strength of eight core in labour intensive sectors reveals the number of new jobs created has fallen from about 12.56 lakh in 2009 to 1.35 lakh in 2015.

In fact, a UNDP report in 2016 revealed that India had been able to absorb only less than half of new entrants into the labour market between 1991 and 2013. The report went on to say that India will face a severe job crisis in the next 35 years.

Another OECD report stated recently that about 30.5 percent of India’s youth (aged 15-29) are neither in employment nor in education and training. Therefore the question we need to ask is amidst this lukewarm job creation situation in India, is it desirable for the brain which has drained out of India to return?

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Start-Ups Will Help in Job Creation

The answer may lie in start-up businesses and entrepreneurship. With companies like Paytm, Oyo Rooms, Swiggy, Ola Cabs hitting it big in the Indian marketplace, we can reliably assume that start-ups will help the Indian government in driving job creation in the coming years.

High-level research and innovation happen in start-up businesses, most of which directly aim to address a problem with the marketplace or the economy in general. With endless talent and high-skilled labour, India is poised to become the start-up hub of the 21st century, provided that we start to properly cultivate incubators with large capital infusion.

We at the Office of Member of Parliament, RK Jena, have been working on this issue for some time now and in the next couple of weeks will be launching an intervention which in our view will lay a foundation in tackling the brain drain from India.

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(Athreya Mukunthan (@athreyamuki91) was a LAMP Fellow 2016-17 and currently heads the research team at the Office of Lok Sabha MP, RK Jena and Eashwar Nagaraj (@_tamilpayyan), a student from Miami University was a Research Intern in the MP’s office. This is a personal blog and the views expressed above are the authors’ own. The Quint neither endorses, nor is responsible for the same.)

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