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  1. Modi’s war on black money chasing away millionaires? Why the rich leave India

Modi’s war on black money chasing away millionaires? Why the rich leave India

The pace at which millionaires are leaving India -- the highest in the world -- may affect the domestic markets, and may not bode well for India, Morgan Stanley's Ruchir Sharma said.

By: | Updated: March 21, 2018 11:08 AM
Morgan Stanley, Ruchira Sharma, PSU, public sector, Indian economy, holding back economy, Indian banks, emerging markets The 2017 net outflow was 7,000 and the cumulative net outflow since 2014 is 23,000. (Image: YouTube)

Back in 2014, Narendra Modi swept to power with a promise to weed out corruption, and to help everyone to benefit from India growth story. Nearly 4 years on, while it is still a matter of a great debate whether the fruits of the economic development have trickled down to the last level, few would argue over his efforts to crack down on the menace of black money. As for unintended consequences, the country has seen an increased exodus of rich and wealthy, Ruchir Sharma, Chief Global Strategist, Morgan Stanley Investment Management, says. The pace at which millionaires are leaving India — the highest in the world — may affect the domestic markets, and may not bode well for India, he said at a recent event. In an interview with Ashish Pandey and Shaleen Agrawal of FE Online, Ruchir Sharma shares details of the data compiled by Morgan Stanley, based on a survey carried out by the NW Wealth organization. Here are the edited excerpts:

What is the number of millionaires who have left India since 2014, and over the last one year?

The 2017 net outflow was 7,000 and the cumulative net outflow since 2014 is 23,000. In 2017, 2.1% of millionaires left India. The cumulative net outflow since 2014 as a share of the latest 2017 millionaire population was 6.9%.

To which countries are Indian millionaires most likely to go?

Unfortunately, we do not have specific data on which countries Indian millionaires in particular are going. In general millionaires are migrating to places such as Auckland, Dubai and Toronto.

How has the trend in the exodus evolved over the last few years?

No, unfortunately this data that we have accessed only goes back to 2013 so we can’t determine a trend before 2014. But what is clear is that trend over the past few years has accelerated as in 2015 the net outflow of millionaires from India was 4,000 and last year it was 7,000 from India.

Would you like to comment on the likely reasons for these people leaving India? What economic opportunities/ benefits do they find overseas over India, which prompt them to leave?

One likely reason that Indian millionaires are leaving is due to the anti-corruption and regulatory crackdown in India, resulting in wealthy Indians wanting to move their capital elsewhere.

Where does India stand when compared with the other emerging economies in this respect?

In 2017, more actual millionaires left China than left India. However, as a share of the millionaire population, twice as many millionaires left India than from China. In fact, at 2.1% India’s share of total millionaires leaving the country was the largest of any major nation.

What is the definition of ‘leaving India’ in this regard?

Refers to people that have physically moved from the country and spent 6+ months in a new country per year. It excludes those that have bought residences in a new country but have not physically moved there.

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  1. Mano Manu
    Mar 23, 2018 at 10:21 am
    totally wrong. what about malaiya, nirav, choksi and many more others who ran away with people money
    Reply
    1. Viacheslav Viacheslav
      Mar 22, 2018 at 9:21 am
      Just wait for them to do another scam in the country where thry have gone.. Those who became rich by hardwork n sincerity wont leave thd cluntry...those who became rich overnight are fearing of crackdown n hence leaving india....good luck to the countries where thry have gone
      Reply
      1. Rajanikanth Shastri
        Mar 21, 2018 at 11:13 am
        PM Modi should clean house first along with corrupt bureaucrats before going after private citizens. The demonetization was a good move with 50 of unaccounted deposited money being confiscated and 25 quarantined for a year. After that give the HNI a break to surface their shadow companies and create s. There are two types of money - productive and unproductive. It does not matter if money is Black or White as long as it is productive and create s. The Govt should ins ute policies that enable this "hidden" asset to surface. Look at all the Malls and shops. They were probably funded by "Black Money" and now have created s. The IPL was another avenue by which money parked abroad was brought in. Unaccounted money is the grease that keeps economies running the world over. For example, the oligarchs of Russia over pay for assets outside of Russia and thus "launder" their money. It is stipulated that Trump sold properties in the US at in ed prices.
        Reply
        1. Shankar Venkatah
          Mar 20, 2018 at 8:46 pm
          here people are not treated equally be it rich or poor. Politicians and criminals are treated better at the hands of govt. servants ....people immigrate for so many reasons but from Indian point of view it is criminals rowdies and govt. servants enjoy living here and not the good citizens...If u have money better leave .. TOLERANCE AT ITS PEAK ...NEED NOT BLAME ONE INDIVIDUAL MODI AS HE CANNOT HELP IT
          Reply
          1. Pappa Vaidyanathan
            Mar 20, 2018 at 4:35 pm
            If according to Mr Ruchir Sharma, one likely reason that Indian millionaires are leaving is due to the anti-corruption and regulatory crackdown in India, resulting in wealthy Indians wanting to move their capital elsewhere, would it mean that if no "anti corruption" measures were taken and there was no regulatory crackdown, they would have stayed back in India. I would appreciate a reply from Mr Sharma, as the probable reason could be due to nationalisation of industry,and inefficiency of the public sector undertakings infested with corruption and interference by mul ude of political parties..
            Reply
            1. Ashok Agrawal
              Mar 20, 2018 at 3:28 pm
              Why comments are not displayed by your rapper?
              Reply
              1. Ashok Agrawal
                Mar 20, 2018 at 3:21 pm
                What way were these millionnaires contributing to effective growth in? The rich who are unscrupulous and indulge in unhealthy economic activities are better off away from the country. India solicits FDI FII, but productively and in accordance with national priorities.
                Reply
                1. Stchandrasekhar Babu
                  Mar 20, 2018 at 2:52 pm
                  One basic reason why rich are leaving India is knee jerk reaction and hounding by the govt. Take case of Malta ,according to consortium leader ,the dues are to the tune of INR8000/ crs including penal interest etc etc andMalya ed INR7000crs for one time settlement normal course any bank/s would have accepted gladly.But because of publicity and political overtimes could not do it. Similarly had the bank and others interacted with nirav yhr,back door channels ,he would have settled the matter. But the govt ed his passport ,CBI and ED raided ,and his business came to a stand still With myopic vision.both demonetisation and GST was heralded with polical publicity.Economic decision should not be played with politics. Now Indian economy will not look up for another 2/years. Dead SME are countless in this massacre fiat by jumlas.
                  Reply
                  1. Prakash Jamanale
                    Mar 20, 2018 at 1:29 pm
                    If crooks and black money holders are running out of India being scared by the government crackdown on them, would it be proper to blame the incumbent government ? Rather, the govt needs to be complimented for showing the courage and spine and political will. The previous governments were criminally culpable of not taking any initiative in taking stern action in the matter. The potential persons trying to run away should be detained and jailed. If the opposition don't co-operate in passing a suitable law for such action, the govt should bring out an ordinance to do so.
                    Reply
                    1. Pramod N Kathavi
                      Mar 20, 2018 at 2:30 pm
                      Absolutely correct. Don't be surprised if this Sharma also leaves this country. He doesn't appear to be diffe . 👏👏👏👏👏👏
                      Reply
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