IV: Soft power, mobilization and development

Diasporas as the holy grail of development


Latha Varadarajan


On September 22, 2019, a crowd ot nearly 50,000 cheered raucously as Indian Prime Minister Narendra Modi took the stage at the NSG stadium in Houston, Texas. For a man who had once been denied a visa to the United States because of his role in the 2002 Gujarat massacre, the “Howdy Modi” event marked a triumph that seemed to have been a few years in the making. However, Modi made it point to insist that the rally was not about him. Rather, it was about India and the Indian-Americans who, as he had noted in a different context, had shown him the “kind ot love [that] has not been given to any Indian leader ever” (Tolan, 2014).1 Speaking under a banner that proclaimed “Shared Dreams, Bright Futures,” Modi declared that while “Indians were known for their patience,” he was “impatient to take the country to new heights.” The “buzzword in India today was development,” and the people in audience were “an important part of it,” despite being “tar from [their] homeland” (The White House, 2019).

While the “Howdy Modi” rally drew immense coverage for reasons ranging from the sheer number of the gathered audience and seemingly limitless funds that the BJP could count on from its overseas supporters to the disturbing camaraderie between the Indian Prime Minister and his American counterpart, Donald Trump, there was one aspect that hardly raised any eyebrows. And that was the fact that the leader of the “world’s biggest democracy” was making a pitch to expatriate Indians, asking them to invest in “India’s growth story” by promising new investment opportunities, a more benign bureaucracy, and generally favorable business climes. The reasons for this are not hard to understand. For one, Modi was the leader of a party that has consistently cultivated deep roots among overseas Indian communities. But, perhaps even more importantly, he was merely the latest among a long line of Indian politicians, who since the early 1990s had reiterated the notion of the diasporic “Global Indian” as a vital resource for a resurgent India, and put into place a series of measures that would attract diaspora investment. These measures have not been peculiar to the Indian state. A large number of countries — in Asia, in Africa, in the former Soviet Republics and the eastern bloc, in Latin America — have all attempted their own versions of the “global nation” strategy and have in fact been actively encouraged by international institutions including the International Monetary Fund (IMF) and the World Bank to do so. It is these developments that bring us to the question animating this chapter: why is it that diasporas have become such an attractive prospect for governments and international institutions alike at this historical juncture?

At a cursory level, the answer to that question appears to be self-evident. As policy memos from national and international agencies reiterate, a large number of countries have a growing emigrant population and these populations are responsible for the very significant flow of remittances across borders. In addition to this fact, there are conjectures about the strength of the emigrants’ national affiliations, and their ability to become an essential part of longterm economic transformations. The underlying assumption of these conjectures, based in part on a specific understanding of the much-vaunted role of the Chinese diaspora in the exponential economic growth of the PRC, is the notion that emigrants, having familial ties to the homeland, would naturally have a greater stake in its development. For these reasons, the growing attention paid to the notion of “Diaspora Direct Investment” (DDI) as an alternative to the traditional Foreign Direct Investment (FDI) is but an extension of rational economic planning. However, as I have argued, these reasons are not the only — or for that matter — the primary ones why diasporas have increasingly become the “newly valorized” subjects of the nation-state (Ong, 1999; Varadarajan, 2010, 2015). Discussions of the role of diasporas in the development agendas of nation-states are fundamentally premised on the claim that the ongoing structural transformation of the global and national economies along neoliberal lines is not only beneficial to all, but also the only way forward. As such, even though such discussions are wrapped in the rhetoric of national confidence or the desire of migrants to give back to their homeland or the notion of economic growth, the main pay-off remains furthering an agenda of deregulation and privatization.

To make this argument, I begin by providing a brief overview of the timing and the ways in which the diasporic subject — the “Overseas Indian”/“Person of Indian Origin”/“Non-Resident Indian” — has been inserted into the Indian state’s narrative about its resurgence. I then situate this development within the broader context of the clamor surrounding the economic role of diasporas world-wide. I show that while this might be framed within domestic and international policy discourse in terms of transforming the potential of remittances into direct investment, the role of diasporas is actually tar more critical for ruling elites. The siren song of “DDI” remains as strong as ever mainly because diasporas serve a far more useful function — that of helping the ruling class reiterate notions ofjingoistic nationalism, and justify the on-going systematic neoliberal restructuring of the economy in the name of development, even in the face of extreme and growing levels of inequality.

Celebrating a return

On January 9, 2003 the Indian government hosted the first-ever Pravasi Bharatiya Divas (PBD), a celebration that was meant to highlight “the pride of the motherland” in the successes of “her children abroad,” who at that point numbered over 20 million. The date of the celebrations carried quite a bit of symbolic heft. It was on January 9, 1915 that Mahatma Gandhi — “the most famous Non-Resident Indian (NRI)” — returned to India after 21 years in South Africa. As various government representatives claimed, by choosing that particular day to host the event, the Indian nation-state was acknowledging the immense contribution of people of Indian origin in the creation of modern India.

Welcoming the 2,000 delegates to the three-day celebration, Prime Minister Atal Bihari Vajpayee declared that the gathering was actually a homecoming of the children of Mother India who, despite adopting the citizenship of other countries, had not lost their “common identity” — their Indian-ness. Indians abroad, he claimed, had reached “the pinnacle in so many diverse fields of human endeavor” because of “their dedication to their chosen professions” and willingness to overcome “trials and tribulations.” This, in turn, could be traced to the “indomitable spirit” that characterized India and Indian-ness (Vajpayee, 2003).

The question of what constituted “India” and “Indian-ness” dominated the discussions surrounding the PBD celebrations. To mark this momentous occasion, the popular national weekly India Today published a special issue commemorating “The Global Indian,” who was “Doing Us Proud.” In his editorial, the well-known journalist Aroon Purie claimed that one did not need the Indian government to tell the world that there was a 20 million strong Indian diaspora. Through a “quiet, gradual, but relentless” migration, Indians had carried out what he called “a reverse colonization.” Despite arriving in places such as Fiji as indentured labor during the colonial period, Indians had overcome insurmountable odds and “today, their children are presidents, prime ministers, senators, tycoons and Nobel prize winners.” Echoing a theme that framed the Pravasi Bharatiya celebrations, Purie declared:

Persons of Indian Origin are impossible to typecast.. .They come in all shapes and sizes, fit all descriptions. What links the astronaut on our cover with the Punjabi sheep farmers in New Zealand?2 What connects white-collar techies in Silicon Valley to the Indians who seem to have a monopoly on 24-hours stores in Britain — or the Patels who so dominate the US motel industry that motels are often referred to as “Potels”? It is the will to succeed.

In other words, what made them “Indians” was the “indomitable will” — the spirit of enterprise that was intrinsic to India. Wherever they went, regardless of the passport they carried, it was this spirit that characterized all Indians. For, as Purie concluded quite seriously, “you can take an Indian out of India, but you cannot take India out of an Indian.”

The linking of the “spirit of India,” first with an entrepreneurial attitude, and then with the Indian diaspora at large, while very much in the air in the early part of the 21st century was, however, a relatively new phenomenon in Indian politics. In the immediate aftermath of independence, the Indian nation-state had not only distanced itself from its overseas population, but also clearly indicated that any form of dual citizenship would not be considered. This was a policy that had more or less remained in place for over tour decades. It was only in August 2000 that the Indian government had even established a “High-level Committee on the Indian diaspora” (HLC) tasked with recommending a “broad but flexible policy framework” to facilitate the involvement of the diaspora in India’s development while making it possible for India to be more receptive to their needs. The tact that this move had been made by a BJP-led government was not accidental.

Perhaps more than any of the other national parties, the BJP, with its commitment to the right-wing hindutva ideology, had systematically cultivated links with Indian communities across borders. Organizations such as the “Vishva Hindu Parishad” (VHP) and its various affiliated groups had built support for the BJP, even as it rose to power within Indian domestic politics. This supposedly “organic” connection was reiterated and reaffirmed in the immediate aftermath of 1998 nuclear tests, when the BJP-led government declared that the threatened economic sanctions from the P-5 would be offset by the commitment of Indians abroad, who would stand by a “Resurgent India.” The claim seemed to be given some credence by the fact that the “Resurgent India” bonds issued by the government were immediately over-subscribed, bringing in a much needed $4.5 billion into the state treasury.3 Many, in fact, declared that the establishment of the HLC was but a long-delayed acknowledgment of these already-existing links.

Notwithstanding the veracity ot the some of the afore-mentioned claims, it would be a mistake to fixate on the hindutva angle to truly comprehend the logic underlying the transformation ot the Indian state’s relationship with its diaspora.4 While the specific institutional changes heralded by the establishment ot the HLC or the celebration of the PBD could be connected to the BJP government, the process that led up to that point had deeper roots and reflected a boarder, multi-party consensus. In fact, the “Non-Resident Indian” and the relationship of this subject to the Indian state had been the source of much debate within the Indian Parliament, as well in public discourse through the 1980s, finding its peak around the early-1990s. As Mishra (2016) notes, it was the Rajiv Gandhi-led Congress government, which established the first Special Coordination Division to engage with the diaspora in the Ministry of External Affairs 15 years prior to the HLC. The same government also collaborated with various diaspora groups, throwing its support behind the creation of the Global Organization of People of Indian Origin (GOPIO), which held its first meeting in 1989. And ot course, it was the Congress-led government of P.V. Narasimha Rao that officially introduced a fundamental restructuring of the Indian economy along neoliberal lines in 1991, while simultaneously speeding up the process of formalizing the Indian state’s relationship with its diaspora. All of this is to merely make a simple — but generally skimmed over — point that the valorization of the Indian diaspora as the embodiment of the best of “Indian-ness” can be traced not so much to the rise of the BJP, but rather the moment when Indian-ness itself needed to be redefined. I will return to the question of what necessitated this redefinition later on in the chapter. For now, it suffices to note that over the last two decades of the 20th century, there emerged a multi-party consensus among the Indian elite that this new notion ot “Indian-ness” — a spirit ot entrepreneurship, of competitiveness, ot innovation, all understood in terms of neoliberal tenets — required a new subject, the “Global Indian.” This consensus has continued to prevail into the first two decades of the 21st century.

Over the past two decades, successive Indian governments have continued the tradition ot celebrating Pravasi Bharatiya Divas, while building a network of institutional arrangements that have further formalized the relationship between the Indian state and the groups that have been constituted as its diaspora. These have included the establishment ot the Ministry ot Overseas Indian Affairs, the adoption of limited dual nationality through the “Overseas Citizen of India” scheme, a series ot measures under the umbrella of the “Overseas Indian Facilitation Center” to further the involvement of the diaspora in the Indian economy, the creation ot the Indian Development Foundation of Overseas Indians (IDF-OI) to further diaspora involvement in philanthropy, to name just a tew (Mishra, 2016). What makes these moves striking is that they are far from being peculiar to India, and in fact have been actively encouraged by International Financial Institutions (IFI) as an important policy orientation that states across board need to adopt. As to why, the answer appears to lie in certain visible trends in global politics.

The promise of returns

According to the United Nations, as of 2019, over 271.6 million people live outside of their countries of origin (International Migrant Stock, 2020). A distinct proportion ot this group consists of migrants who have in the past several decades moved from what has been categorized as the “Third World” to the “First.” While the nature of the migrants (for instance, whether they are blue-collar or white-collar laborers) and the conditions of their migration (very broadly, whether it is considered legal or illegal, and if the former, the constraints on their travel visas, etc.) vary across different contexts, they do share a crucial trait. For the most part, these migrants have come to constitute diasporic communities that have retained close links to their homeland, communities which tend to reinforce these links through a constant and growing stream of remittances. As estimated by the World Bank, in 2018, the amount of remittances that flowed to developing countries amounted to US$ 529 billion, an increase of 9.6% from the previous year. Among the largest recipients of officially recorded remittances were countries like India (US$ 79 billion), China (US$ 67 billion), Mexico (US$ 36 billion) and the Philippines (US$ 34 billion), followed by others like Nigeria, Egypt, Pakistan, Bangladesh, Vietnam and Ukraine (World Bank, 2019). But perhaps smaller and lower-income countries provide a starker picture when it comes to understanding the significance of remittances. For Haiti, it was estimated that in 2019, remittances would amount to 34% of the GDP, for countries like Tajikistan, the Kyrgyz Republic and Nepal, it amounted to around 30%.

Given these kinds of numbers, it is not surprising that international financial institutions as well as the governments of the recipient states have become quite invested in facilitating the flow of remittances. The World Bank has determined that migrants pay an average of 7.9% of the total amount of money being sent home as transaction costs on both ends. Consequently, it has been pushing for states to adopt measures that would reduce this cost to around 5%, saving migrants around US$ 16 billion per year. While this policy is yet to be adopted, receiving states, on their part, have engaged in a concerted effort to streamline the process of transferring funds across borders. However, this is merely one part of the story. There is another critical statistic pertaining to diaspora remittances — even when based solely on the recorded government data, remittances account for nearly three times the official development assistance (a measure of the international flow of aid) provided to developing countries. In this context, it is not surprising that policymakers at both national and global levels have greater ambitions in highlighting the importance of diasporas than the mere pursuit of increased remittance flows. What they seek are ways to channel the economic resources of diasporas into direct investments in national economies, whether it is in the private sector or in some version of the public sector. In other words, the mantra these days is not so much remittances per se, as much as it is Diaspora Direct Investment (DDI).

The arguments supporting the conscious, intensified drive for DDI are at one level quite familiar (see, tor instance, Debass and Ardovino, 2009). Supporters argue that this form of investment can spur growth across sectors and in different ways. These investments, it is claimed, serve to increase capital stock and provide greater liquidity to developing economies, even as they improve domestic capacity to carry out essential research and development. In addition, diaspora-led multinational firms entering the market provide new technology to local businesses and customers. In doing so, they can improve the supply chain and reduce the overall costs of the multinational’s own overseas operations. The overall effect, therefore, is said to be an improvement in the efficiency and productivity of the business operations, increased profitability and improvement in the welfare of the consumers.

As even a cursory perusal of the justifications outlined above should make evident, the arguments in favor of DDI are almost exactly the same as those made about the critical importance of FDI in general. However, what is noteworthy is that these arguments are contingent on presenting DDI as a better alternative to FDI. Unlike the latter, it is argued that DDI is driven by those who have social, and in fact familial, connections to the particular country they are investing in and, thus, have a better sense of the various political and cultural nuances of doing business across borders. Their return to the country of origin in the guise of investors adds to the general human capital, while reversing the “brain drain” trends of earlier decades. Because they are dealing with co-nationals of a sort, diaspora investors, it is argued, are even more likely than foreign investors to enable the spillover of technological know-how to domestic firms. Such investors are said to have a greater stake in the timely and efficient completion of specific projects as well as the overall welfare of the general population, in part due to a sense of national pride and duty to the homeland. Furthermore, unlike with FDI, where most profits tend to eventually flow out of the country, DDI is said to promote “capital recycling,” with a significant portion actually staying on in the developing country. To put it crudely, the fact that the investment comes from sources that might be regarded as “native” (or at least formerly “native”) as against “foreign” makes DDI seem more reliable, flexible and also more directly linked to the prospect of economic growth.

These arguments, supporters of DDI claim, are not merely abstract assertions given that they have already been proven to be true in specific national contexts. In particular, the Chinese case is constantly highlighted as the exemplar of how DDI can be attracted and used to spur economic growth. The story of China’s emergence as a major world economic power has now taken on almost mythic proportions among politicians and policymakers proposing economic reforms. A critical part of this tale pertains to how the country transformed itself from a land shunning FDI to becoming one of the world’s foremost destinations for investors. The numbers tell their own story in this regard. In 1980, China attracted a mere US$ 596 million in FDI. By 2019, this number had grown to a record-breaking US$ 136.7 billion (Reuters, 2020). What is even more striking is that a significant portion of that investment — well over 50% as calculated over the past three decades — came from overseas Chinese, particularly those living in Hong Kong, Taiwan and Pacific Rim. As FDI analysts have noted, some of these numbers are a bit dubious, given the “round-tripping” — i.e., a noticeable trend of investors from mainland China re-directing their capital through neighboring countries in order to benefit from the special FDI/DDI incentives. However, that tact is not allowed to mar the main story. China’s ability to attract DDI, it is argued, set it on the path of becoming the world’s second-largest economy, and therefore it only makes sense to assume that the policies it followed would be a workable blueprint for countries that possess a substantial diaspora.

Following this logic, the World Bank, for instance, has formally established a special task force that helps clients develop and institute “innovative financial instruments,” such as diaspora bonds aimed at leveraging “migration and remittances for national development purposes.” The ultimate promise of such instruments is, of course, the replication of the Chinese growth story across borders. It is these developments that form the context of diaspora policies being touted as a critical link that help economic reforms mutate into economic growth in varying national contexts. India is no exception to the rule.

The logic of the quest

In many ways, India is the country that is most comparable to China in terms of the strength and relative economic power of the diaspora. The government established HLC (2001) estimated the global Indian diaspora population at roughly 20 million, around 1.9% of the total Indian population at the time. The similar figure for the Chinese, calculated by Global Commission on International Migration (2005), was between 30 and 40 million — approximately 2.9% of the Chinese population. As mentioned earlier, the Indian diaspora today is the source of the largest flow of remittances in the world, followed closely by the Chinese diaspora.

There are indeed many differences between the Indian and Chinese diasporas (even before one gets to the distinctions within the groups themselves), including the history of emigration, their geographical locations and professional profiles. But, the one that concerns Indian policymakers the most is the difference pertaining to levels of investment. India has not been as successful in attracting the same levels of FDI as China (Brown, 2017). While that is considered a problem in itself, what is even more problematic from the policymaking perspective is that in contrast to the Chinese diaspora, the Indian diaspora’s contribution to the total investment flowing into the country is estimated at less than 5%. It is this issue — the question of why India has failed to attract DDI at levels comparable to China — that has formed the crux of deliberations among those studying the Indian state’s changing relationship to diaspora, be it academics or policymakers.

To a large extent, these studies and policy briefs stick to a common narrative structure. Many of them begin with a quick sketch of the history of Indian emigration, pointing to the significance of the colonial era in the creation of specific pockets of the diaspora in parts of Africa, Southeast Asia and the Pacific islands, before moving to a discussion of the post-independence migration. This migration, which became more marked by the mid-1970s, was primarily toward the West, but followed two distinct trajectories. One, focused on West Asia, comprised of the migration of primarily blue-collar workers to the oil- rich economies of the Gulf countries. The other, directed toward the countries of Western Europe and North America (particularly the Unites States), consisted of the migration ot highly skilled white-collar workers and their families. Unlike the migrants of the colonial era, these migrants, whose very existence led to the creation of the legal-juridical category ot the Non-Resident Indian, retained close ties to their homeland, becoming a reliable source of remittances, transforming both familial fortunes and, in certain cases, even local economies (particularly in Kerala). By the early part of the new millennium, one particular group within this new Indian diaspora — trained IT professionals who had already played a critical role in shaping the American Silicon Valley — was willing to redirect their expertise and financial resources to India. The support they were offered by the various Indian governments during this period allowed the members of the Indian diaspora to help shape the country into a powerhouse in the field of information technology. Unfortunately, however, this success has not been replicated across other sectors, where the involvement of the diaspora has been virtually non-existent. The reason for the lack ot DDI across sectors, it is then asserted, is the absence of real structural transformation of the Indian economy. This then becomes the basis of the policy prescriptions that follow.

For all the claims made over the past two decades and a half about economic transformation, India, it is argued, remains far from a hospitable destination for direct investment. This state of affairs is considered to be quite tragic given the profile of the over 20 million strong Indian diaspora: its considerable wealth (with some reports estimating it at over US$ 1 trillion and its annual income at US$ 400 billion), technical skill and expertise. India’s failure to capitalize on this “accomplished group” and its effort to “lure them or their capital back” is presented then as a strategic blunder, a “missed opportunity” (see, tor instance, Kapur, 2010; Singh, 2012; Mohan, 2017; Lall, 2019). It was after all the strong commitment by the Chinese Communist Party to follow through and provide favorable conditions for investment, particularly in the industrial and manufacturing sectors, which provided the impetus for China’s phenomenal economic growth. The Indian state, given its sizeable, wealthy and skilled diaspora, has the same kind of raw material available. All it needs are the right structural incentives, particularly less government regulation, greater labor flexibility and adaptability. These measures would help ensure that economic resources as well as technical and business know-how of the hugely successful Indian diaspora are channeled into DDI, and into the replication ot the China growth story.

The narrative outlined in the preceding paragraphs is noteworthy in part because versions of this (with minor variations about the historical specificities of particular migrations) can be found in analyses of diaspora policies across national contexts, and those commissioned by various international organizations. What is more significant is that it reveals how the focus on DDI serves to further a very specific political-economic agenda. The starting point of any analysis of the economic potential represented by migrants is of course the diasporas themselves. But, with a few quick sleights of hand, diasporas in general tend to become those who have the ability to invest in sectors such as industry, technology or finance (by definition, a much narrower stratum of entrepreneurs), and the barrier to the realization of their potential becomes the insufficient embrace of neoliberal restructuring.

Historically speaking, this is not a novel move in the annals of Indian politics. There is a common myth that Indian economy was only freed from its archaic socialist leanings by the much-needed economic reforms of 1991. Even without going to the question of how “socialist” the Indian economy ever was, it is important to correct this misapprehension. The structural reforming of the Indian economy had begun much earlier than 1991, even though there had been attempts to give it a different gloss. Indira Gandhi’s government, which had embarked on this program in the early-1980s, tried to pretend that the economic restructuring was part of unilateral domestic initiative, unconnected to the major IMF-loan that it had received. There was even a new term coined for the set of policy initiatives that the Indian government put forth — “Homegrown conditionalities” — which strangely enough coincided with the kind of deregulation otherwise insisted upon by the IMF. It was under the aegis of this restructuring that the figure of the NRI investor first strode into political center stage. Mrs. Gandhi’s NRI Portfolio Scheme, introduced in 1982, allowed for portfolio investment in Indian companies by “non-residents of Indian nationality or origin,” or companies that were owned by such non-residents to the extent of at least 60%. The scheme soon ran into rough weather with one particular case involving the UK-based Swraj Paul becoming a cause celebre. The legal battle between Paul and two major Indian companies (DCM and Escorts Ltd) involving claims of a hostile takeover was a protracted affair that quickly devolved into a referendum of sorts about the nature of the Indian economy as well as the dubious figure of the diaspora investor. It ended with a temporary setback for both Paul, and those pushing for deregulation.

The changing nature of the global capitalist economy as it moved from the Keynesian phase to the neoliberal phase resulted in the realignment of social forces among the ruling class across board. Without going into the details of the political struggles that ensued, it should be noted that in India this realignment saw the weakening of the old storied industrial faction of the bourgeoisie that had long roots in the nationalist movement, and the gradual emergence of a new faction which embraced the “sunrise industries” and favored privatization. The main implication of these changes was that within the span of a decade since the attempts by Mrs. Gandhi’s government, neoliberal economic restructuring was not only back, but presented as the only way forward. And to provide the “homegrown” gloss, with it returned the figure of the successful NRI, the “global Indian” who was only waiting for these reforms to reinvest in the motherland.

The debates surrounding the introduction of neoliberal reforms in the Indian Parliament, and in public discourse were all framed in these terms. As 1 have shown elsewhere, the economic restructuring which was initially seen as a sign of weakness — of the Indian Finance Minister Manmohan Singh going to the IMF with a begging bowl — was re-packaged as a choice of a nation-state that had finally come of age (Varadarajan, 2010). Far from exposing an inability to refuse the demands of I FIs, by opening the economy the Indian state was declaring its willingness and ability to compete on the global stage. This willingness, the ruling elites argued, came not so much from some misplaced confidence, but from the certainty that those animated by the “spirit of India” had already proven their ability to hold their and succeed beyond their wildest dreams on the global stage. These were the “Non-Resident Indians,” the “Persons of Indian Origin” — the “global Indian,” who like India herself, had “come of age.” This representation of the “global Indian” was quite different from the way in which “NRIs” had figured in past narratives about the role of India on the international stage. The exhortations of the Nehruvian governments to overseas Indians to be “non-exploitative” were followed by decades of what has been described at best as “benign neglect” and at moments, actual excoriation of the actions of diaspora as being “self-interested.” By the 1990s, all of that changed, and only continued down the path through the first years of the 21st century.

The rehabilitation of Swraj Paul, once reviled in the Indian parliament for representing the rapacious foreign investor, is a perfect illustration of this trajectory. Already much feted by the Indian government, Paul shared center stage with then Indian External Affairs Minister Sushma Swaraj at the regional Pravasi Bharatiya Divas organized in London in 2014 (PTI, 2014). Inaugurating the event, Mrs. Swaraj, who was also responsible tor the Ministry of Overseas Indian Affairs, told her audience that “now is the time to come to India,” since there were “immense opportunities” waiting for them, especially in the fields of “manufacturing, infrastructure development, education, health.. .science and technology, research and innovation.” To facilitate this participation, her government was committed to providing “efficiency, accountability, speedy decision making...and [a] favourable business environment.” Should the members of the hugely successful overseas Indian community experience any difficulty or bureaucratic red tape in their efforts to return to their homeland and participate in “India’s growth story,” all they needed to do was to let the minister know and she would solve their problems. Speaking after the minister, Paul used his own experiences to claim that expatriates have wanted to give back to India since the 1980s, but had been prevented from doing so because of “some members of the establishment, some politicians and local business community.” To encourage the diaspora to invest in the country, Paul concluded, India needed to remove the “barriers” to “expat engagement” and simplify its rules. In other words, to reinforce the commitment of the diaspora to India’s development, what was needed was a greater commitment to deregulation.


The idea that migrant populations around the world might be interested in investing in their homeland, and shaping its future, is in and of itself not a preposterous proposition. In a historical sense, and certainly in the Indian case, populations abroad have been an intrinsic part of political struggles waged in their homeland. What is problematic, however, is the attempt to harness and direct this investment in the service of a particular understanding of economic growth. The returns sought by the investors, whether diasporic or foreign, are premised on the guaranteed existence of certain conditions. Euphemistically termed “flexibility” or “adaptability” what these conditions actually mean are low wages and removal of any existing protection tor workers — such as can be found in the Special Economic Zones (SEZ). The idea behind an SEZ is of course to create a small enclosed territory within a country where a different set of regulations (land, labor, tariffs) apply in order to attract businesses that would supposedly not consider opening operations under other conditions. Under the SEZ law passed by the Indian parliament in 2005, for instance, the benefits offered to potential investors include a five-year holiday on profit taxes, exemption from import and export duties, and fewer licensing requirements (Topno, 2005). Furthermore, investors are also given the leeway to treat the land harnessed for the SEZ as a property deal, since by law only 50% of that land needs to be used for industrial activity. While the deal might be tempting for investors, it is important to note that the territories targeted as potential SEZs are not unoccupied lands. To establish such zones requires the displacement of the people who live and labor on the land, and in most cases the process is tar from peaceful or just. In the long run, the growth it promotes thus remains tar from equitable. In fact, if one looks closely, the Chinese story should serve more as a cautionary tale than as a model.

China, the country that is touted as the model for DDI, ranks among the most unequal societies in the world today. Recent reports indicate that the Gini Coefficient (zero representing absolute equality and one representing absolute inequality) for China was has shown a distinct upward trend during the decades of reform, standing now at a high of 0.46 — a level that is higher than even the United States (World Population Review, 2020). According to reports from Peking University a few years ago, a third of the country’s wealth is concentrated in the hands of 1% of its population, with the poorest quarter of citizens owning about 1% ot the total wealth. It is this kind of “growth” that is presented as the prize that can be won with the participation of diaspora investors (Kaiman, 2014). This, I would argue, is more than enough reason why one should subject the quest for diasporas as the holy grail that will somehow help states attain a pinnacle of development in the global capitalist economy, to greater critical scrutiny.

There is, moreover, another development that further complicates and vitally affects the future prospects of development understood broadly. The coronavirus pandemic that was unleashed in early-2020 has already left a trail of devastation in its wake, and its long-term effects on the global economy are yet to be understood. As of now, it is clear that these effects will include a sharp decline in both FDI and remittances. The UN trade and development body (UNCTAD) recently revised its forecasts about the effects ot COVID-19 on global FDI flows from a conservative —5 to —15% drop, to an unprecedented —30 to —40% contraction (Chiffelle and Vanham, 2020). As economists have noted, such a contraction would be unprecedented in modern history, and if the past were to be any measure for comparison, this will be exacerbated by the protectionist measures that states will be likely to adopt. While the FDI forecast should be cause enough tor concern for proponents ot neoliberal economic restructuring, the implications of the on-going pandemic tor migration and remittances pattern make the situation even murkier. The World Bank predicts a decline of over 20% in the flow of remittances in the coming year (World Bank, 2020). This decline, the sharpest in recent history, would be the natural result of the fact that migrant workers — already an extremely vulnerable population — would be hard-hit, given the economic depression in host countries. This trend will undoubtedly further exacerbate the economic situation in countries, where remittances constitute a substantial proportion of the GDP. It will also have a serious impact on the daily lives of millions of citizens in countries such as India, which have been the recipients of the largest net amount ot remittances over the past few years.

Beyond the decline in the inflow of remittances, there is also the very real possibility of reverse migration. Emigrants, no longer able to count on jobs in the host countries, might be forced to return home. These unplanned-for returns will undoubtedly place greater stress on public health systems and welfare nets, many of which have virtually been dismantled in the preceding decades under the mantra of privatization, at a time when the economies of the home countries are reeling from the effects ot the pandemic. There is a very real fear that the economic depression will see a new wave of anti-immigrant sentiment, of insular nationalism, of hardening borders that will put diasporic populations, particularly working-class migrants, at great risk. However, this crisis could be an opportunity to re-consider what kinds of investments might be needed for genuine development projects as well the nature and role of nationalism, as well as the state in a globalized world.


  • 1 While the biggest, the rally in Houston was not Modi’s first rodeo in the United States, so to speak. In 2014, a packed crowd of over 19,000 greeted the Indian Prime Minister at a gathering in New York’s Madison Square Garden, marking his triumphant entry into the United States after the visa ban episode. In the years between the two events, the Indian Prime Minister continued wooing the diaspora across the world, packing venues in the UK, Australia, France, Portugal and the Netherlands as part of a concerted effort to woo the diaspora or at least the part of the Indian diaspora settled in the developed world.
  • 2 The cover of the magazine featured the now-deceased US astronaut of Indian origin, Kalpana Chawla.
  • 3 The success of the “Resurgent India” bonds was presented as a clear symbol of the commitment of overseas Indians to the Indian nation-state as it finally proved itself worthy of their regard. BJP spokesperson S. Gurumurthy, for instance, declared:

The sound of the bomb revived Indian civilization, which has been in intensive care unit for

centuries____ [The nuclear tests] made [overseas Indians] shed their shame in associating with

India, which to them was a failed civilization... After that, the NRIs, who used to abuse India, began admiring India. From then on gradually national self-confidence grew.

Leaving aside the absurdity of the claim that anything, let alone a “failed civilization,” could be revived by nuclear states, this apparently unironic statement fails to mention one important fact that might have had something to do with the rush of subscriptions. The bonds had an unusually high return rate of 8.5%.

4 Challagalla (2018), for instance, tries to make the case that unlike the BJP, the “Indian National Congress tends to dissociate from the diaspora and views them as largely burdensome.” And that, this view is evident when one considers the fact that the Congress-led Indian government turned a “blind eye” to the plight of the diaspora that was expelled from Burma (1964) and Uganda (1972). This argument, as I have shown elsewhere, while correct in terms of broader contours of state policy, not only overlooks a few important empirical details, but also completely misses the logic of transformation undergirding the Indian state’s relationship to its diaspora. See Varadarajan (2010) for a more detailed analysis of this claim.


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