61,000 millionaires left India in the last 14 years: Why are the richie rich fleeing the country?
India has the second highest millionaire outflow in the world. A new report by global wealth sector information consulting services firm New World Wealth reveals that India has seen its high net worth individuals leave the country in droves in the last 14 years, with as many as 61,000 millionaires shifting base over high taxes and security concerns as well as better education opportunities for their children.
India is second only to China which witnessed 91,000 millionaires move out in the same period. Earlier this year, another wealth report by Knight Frank revealed that one out every four millionaires is bidding goodbye to India.
"In the last 10 years, 27 percent, or 43,400 millionaires among the 160,600 high net worth individuals (HNWIs) in India, have left the country for better employment opportunities in the US, UK and Australia," noted the report, revealing a serious problem of 'wealth flight'.
The rise of the Indian millionaires has been impressive with the number of rich Indians rising 27 percent in the last year from 196,000 to 250,000. As it turns out, however, that kind of wealth creation has not been sufficient to stem the exodus.
The top five destinations for Indian millionaires are the UK, US, Australia, UAE and Singapore, according to Andrew Amoils, head of research, New World Wealth.
The major reasons to immigrate include turmoil in home country, security concerns and pursuit of better education prospects for their children. But the biggest draws have been better standard of living and tax savings. "The UK, Australia and the USA appeal to people due to language, standard of living, schooling and security. The UAE and Singapore also have a low tax structure," says Amoils.
So it appears that those desiring a better life for themselves and their kids are opting for countries like the UK, US and Australia, while others prefer tax havens like the UAE and Singapore.
This flight of the wealthy is all the more ironic given the government's efforts to bring home the vast amounts of wealth stashed abroad, and promote NRI investment? Can you bring back wealth when the rich themselves are leaving in droves?
"There are so many reasons for leaving India, but the most important one is a sense of security. Safety in life, wealth, food, air, education, and rights," said Prateek Bakshi, a banker in New York.
Despite the proliferation of malls, bars and high end restaurants, the quality of life in India remains poor.
As Firstpost said earlier, close to 100 million Indians don’t have access to safe sources of water, which is not surprising because our waterways are filled with filth. According to Central Pollution Control Board’s (CPCB) 2011-12 annual report, about 60 percent of India’s water-sources (which are routinely monitored) have poor “bio-chemical oxygen demand”, an indicator of organic pollution, and about 68 percent have faecal coliform — bacteria from feces. In terms of air quality, 79 percent of metropolitan cities have very high levels of particulate matter and nitrogen dioxide, both of which are the main causes of air pollution. The fact of the matter is that urban India is rotting and is sinking in its own filth.
Moreover, India's uncertain tax environment doesn't make matters any better. This year alone, the government has sent notices for immediate payment of taxes to companies and investors. The government is trying hard to improve India’s ranking on the World Bank’s Ease of Doing Business index but India currently ranks 142 out of 189 countries behind the likes of Nepal and Mozambique, and on tax issues it performs even worse.
An investment adviser who spoke to Firstpost on condition of anonymity was less concerned, arguing that this exodus is just temporary. While rich Indians may be moving abroad for better jobs and business expansion, most of their investments, especially real estate continue to remain parked in India. This could perhaps explain why the number of billionaires is still growing in India. Last year, Mumbai was home to the most number of billionaires, with 619 UHNWIs, who Knight Frank describes as people worth at least $30 million. Delhi was a distant second with only 157 who were as wealthy.