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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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