pie chart of Indian diaspora distribution around the world Percentage distribution of Indian diaspora [Source: HLC 2001]

The Migration and Development Brief, released by the World Bank in November 2012 World Bank. (2012) Migration and Development Brief, No. 18, 20 November. Washington: The World Bank., estimated the flow of remittances into developing countries for 2012 to be US$406 billion. India, again, retained the top position in terms of total remittances and was expected to receive US$70 billion that year. The size of the Indian diaspora is particularly large, a reason for this high volume of remittances. Jagdish Bhagwati, a noted economist of Indian origin and a member of the Prime Minister’s Global Advisory Council of Overseas Indians, underlined the significance of this diaspora for the development of developing economies in the following manner:

Developing countries seek ways of protecting and enhancing the outflows and of profiting from the many good spill-over effects they expect to benefit from as their own citizens settle in prestigious places in the rich countries … Enhancing these good effects require that countries such as India and Taiwan adopt the diaspora model, extending a warmer embrace to their nationals abroad, so that these spill-over effects can be increased.

The Indian diaspora

There are certain epistemological concerns about the Indian government’s creation of a monolithic, singular imagery of the ‘Indian diaspora’ for people of Indian origin—migrants who had been born in India and descendants of migrants from India born in other countries—in order to generate the idea that they need to have a sense of responsibility for the advancement of their ‘homeland’, India. This state-led discourse glosses over the diversities that exist within people of Indian origin abroad. This discourse also grossly overlooks the sensibilities, positioning and predicaments of Indians living abroad or born and bred in countries around the world, including in Southeast Asia, the Middle East, Africa, Europe and North America. This attempt by the Indian state to craft the idea of a distinct singular Indian diaspora in spite of their different histories and divergent class compositions has been contested by people of Indian origin. The construction of the idea of a single Indian diaspora now also poses serious challenges to bureaucrats during policy-making exercises involving this community. While I am conscious of the inherent diversities among the Indian diaspora and of the deficiencies of the Indian state’s formulation of a singular diaspora-development paradigmatic model, I use the term ‘diaspora’ in its singular denotation primarily to maintain a narrative coherence and to highlight the state lexicon. I have, however, underlined the incongruities of this unqualified use of ‘diaspora’ by the Indian state in several places in this article. It is now reputed to be the second largest diaspora in the world, after the Chinese. Without undermining the narratives of loss and alienation of the Indian diaspora, it can be argued that they have contributed considerably to the progress of their host countries as well as the home (India). Recognition of this vital potential that the Indian diasporic community has for the development of India has led to a rethinking of the government’s approach towards this community. A critical paradigm shift in policy promulgation has occurred, from one that was essentially emotional and cultural to one that is more pragmatic and based on economic matters. In an attempt to replicate the ‘Chinese model’ of utilising the potential of its diaspora for the development of China, the Indian government introduced several initiatives to attract the capital and skills of the Indian diaspora for the development of India.

This article assesses the government of India’s forms of engagement with the Indian diaspora. This assessment of the Indian diaspora’s response to these initiatives is situated within the debates on diaspora and development and from the perspectives of state–society relations. The rest of this paper is divided into five sections, with the first marking out the paradigm shift in the theoretical domain of diaspora and development. The second part narrates the making of the Indian diaspora(s) in order to counter the idea of a singular diasporic community and to underline crucial social stratifications within this diaspora, including in terms of class and religion. This section also explores whether the relations between the Indian state and this diaspora has been influenced by class diversity among members of this community. The third section reviews the initiatives created by the Indian state for this diaspora, while the fourth evaluates the response of this community and their engagement with India. The final section provides some concluding remarks.

Diaspora and Development: A Paradigm Shift

In the early decades after independence, mostly during the 1950s until the 1960s, several post-colonial nations, including India, followed a closed model of nation-building and development planning. The primary intention of these governments was to safeguard the economic interests of these newly emerging nations from the vulnerability of being too exposed to the outside world and from being too dependent on external resources to develop their burgeoning economies. Development models that were adopted were essentially based on consolidation within and gradual progression towards self-reliance on various sectors of the economy. There was a strong emphasis on the construction and consolidation of a territorially determined nation and citizens who could claim entitlements as well as engage in the process of ‘national reconstruction’ or development. In this nationalist discourse of development, the people who were not staying within the territorial boundaries of the nation, labelled loosely as diasporas, were viewed with a certain apprehension for their lack of commitment to the nation they had once lived in.

This would change with the process of globalisation, with its intense flows of commodities, labour and capital, and unprecedented levels and means of communication. Put differently, globalisation has contributed to a symbiotic relationship between countries and transnational flows of human beings and capital. New diasporic communities, with their attachments to multiple national locations, economies and cultures facilitated by new technologies, have become important contours of the ‘new, post-national cartography’ of the global world.

The Geography of Identity

Transnational diasporic networks are contributing significantly towards the integration of national economies into the global political economy by mediating through a complex array of production, circulation and consumption activities. Such integration is further augmented by the fact that transnational businesses and cross-border financial flows have increased appreciably while dual citizenships held by transnational people are becoming increasingly common. In this situation, migrants retain their loyalty to their country of origin alongside their loyalty to the country they have been living in. This is a marked ideological shift from the stern markers of belonging, entitlement and participation in an age of ‘territorial nations’ to one where identity is more malleable and conjectural—key features in an age of a ‘de-territorialised world’. This shift marks a recognition of diasporas as independent actors who have the volition to involve themselves in the contemporary world order. It stresses the agency of contemporary diasporas who have the choice to migrate and to renegotiate the cultural, political and economic domains of the ‘home’ nation state. These ideas mark a noteworthy departure from earlier frameworks that perceived diasporas as victims of their circumstances who were being pushed to emigrate.

The negotiations by migrants in the weaving of transnational networks is no longer for cultural recuperation but also involves certain critical economic activities—remittances, expenditure on services such as communication and travel, capital investment, and philanthropy for the sending countries. Taking full cognisance of this changing context, nation states, including India, are making significant efforts to approach the Indian diaspora by redefining erstwhile ‘national’ processes such as economic development and planning and creating a space for this transnational population in these domains. A profound theoretical proposition about the reorientation of national governments can be found in Portes.

Migrant remittances to countries of origin crossed US$406 billion for developing countries in 2012 and had remained largely unaffected by the 2008 global financial crisis. Such cash transfers were hailed as a panacea for the development of developing economies. Diasporas were no longer perceived as lost children or a ‘brain drain’44. A phenomenological term used in the 1960s and 1970s in developing countries such as India to highlight the loss of knowledge capital following its emigration to developed countries but were being recognised as assets in their countries of origin because they offered not only remittances but also invaluable sources of capital investment, technology transfer, philanthropy, tourism, networking, political contributions and intangible flows in social–cultural domains.

As part of the larger schema to manage and direct international migration, a large number of international agencies, global think tanks, and research and advocacy organisations. To name a few: International Organisation of Migration (UN body); Global Forum for Migration and Development; Migration Policy Institute, Washington; and the Centre on Migration, Policy and Society, Oxford have been established. These organisations have been established largely at the behest of developed economies and international organisations intent on pursuing their neoliberal agenda of growth by setting the agenda and directing development policies for developing countries. Based on these directions in development and enthused by ‘China’s development experiment’ with the support of the Chinese diaspora, the Indian government has adopted the mantra of development through the Indian diaspora by initiating a proactive policy process to engage with this community. These initiatives include establishing an executive body, the Ministry of Overseas Indian Affairs (MOIA).

A critical look at the literature on diaspora and development, including those produced in the context of India by Indian scholars, will reveal certain distressing trends. In its celebration of diasporic remittances and the economic strength of the Indian diaspora, in attempts to mobilise this community for development, the primary focus has shifted from intangible human aspects to tangible figures of how much money is flowing in. In the process, the human costs in terms of displacement, emigrants’ suffering and the effects of being left-behind are disappearing from the debate. This ‘feel good, bring good’ approach is particularly evident in the Indian context where state initiatives are largely aimed at preparing the emigrants and keeping them out so that the flows continue. In this diaspora and development debate, the focus is on dispassionately crunching the data on money coming in without perceiving the ‘emigrant’ as a human.

Making of the Indian Diaspora(s)

In its recent enunciation of Indian diaspora, the Indian government articulated a single imagery of this community. The underlying intention here was to create a coherent monolithic national entity that can be approached and mobilised for the advancement of India. This was articulated by then Prime Minister Atal Bihari Vajpayee in his address at the inauguration of the first Pravasi Bhartiya Divas:

the Indian community abroad often reflects the diversity, which is [a] hallmark of our society here. We are proud of this diversity … but it is also necessary to strengthen the broader Indian identity in the country of your residence. When you are united as Indians, your voice carries greater weight: both for highlighting issues of your concern in your host country and for promoting Indian causes.

In order to provide insights into some of the structural precincts for policy-making by the government, introduced to engage with this diaspora, it is necessary first to account for, briefly, the making of the Indian diaspora. The Indian diaspora(s) is a complex construct(s) and most scholars trace its beginning, in its modern definitional attributes, to the emigration of Indians during the British colonial period. In temporal order, the Indian diaspora is divided into two broad categories—‘old or exclusive diaspora of colonial capital and new diaspora of border in late capitalism’.

‘Old diaspora’ moved during colonial rule of India and it was dominated by contract (indentured) labourers who were taken to other British settlements such as Mauritius, South Africa, East Africa, West Indies, Guiana, Malaysia, Singapore, Burma and Fiji to work in the plantation sector or to serve as construction workers. This movement also included free migrants, such as petty traders, and auxiliary workers, such as washer men, milkmen and soldiers, as well as some financiers, such as the moneylending Chettiars who ventured to Southeast Asia. The origins of this diaspora can be traced primarily to Bengal, Bihar, Tamil Nadu, Uttar Pradesh (UP), Andhra Pradesh and parts of western India. Indians in this category have now settled in these countries for several generations. To the descendants of these migrants, India as a diasporic home is largely an imaginary construct.

‘New diaspora’ is a product of Indian emigration post-1960, with migration of Indian professionals, doctors, engineers, scientists, academics, and now IT professionals to developed economies in Western Europe, North America and Australasia. This new diaspora includes the semi-skilled working class who went to the Gulf countries during the post-oil boom of the 1970s. This cohort includes low-wage workers in the West as well a large number of ‘illegal’ immigrants. The origins of this diaspora can be traced primarily to Kerala, Tamil Nadu, Andhra Pradesh, Punjab and UP, though this is a more pan-Indian diaspora. The connection to home is much more real for this diaspora because of frequent travels, social–cultural linkages, and inventions in communication technology. Both old and new segments of Indian diaspora feature almost all the traits of ‘home’ in terms of religious, social, cultural and regional diversities which have had a decisive influence on their relationship with India. Figure 1 shows the spread of people of Indian origin (PIOs) across the globe.

Figure 1. Percentage distribution of Indian diaspora (PIOs and NRIs). Source: HLC 2001.


India’s Engagement with the Diaspora

A government can adopt a range of methods to engage with its diaspora, ranging from the very symbolic to concrete policies. Diaspora policies of a nation essentially entail a composite of state institutions, statutory practices and legislative promulgations formulated to serve the interests of the extraterritorial population. Through these policies, the home country will attempt to capitalise on its diaspora by extracting from them finances, expertise of different sorts and strategic influence. In India, these policy initiatives include bilateral arrangements to facilitate the flow of emigrants and money, changes in basic financial regulations, state-sponsored celebrations of expatriates and recognition of their achievements. These initiatives by the Indian government were not well structured and articulated. In fact, for a long time, particularly during the Nehru and Indira Gandhi regimes, the government had been accused of being indifferent to the concerns of the Indian diaspora. This alleged indifference has often been judged as a missed opportunity.

Changing Attitudes: From 1985

Scholars have marked the period from 1991 as the time when the government began changing its attitude towards the Indian diaspora, commencing also an active engagement with them. This change occurred in the wake of an economic crisis that led to economic reforms involving the adoption of neoliberal policies. However, I would like to pre-date this changing phase to the beginning of 1985, or Rajiv Gandhi’s premiership, primarily for two reasons: an institutional set up to engage with the diaspora and a visible engagement with this community based on methods to develop India had been created then.

The instances of engagement with the diaspora began bourgeoning as official policies as remittances grew in the 1980s, from US$430 million in 1975 to US$2,757 million in 1980, marking an increase of more than six times (see Figure 2).



Figure 2. Remittance Inflow in India US$ Million. Source: Remittances data inflows,

As the government began to recognise the economic potential of this diaspora, then Prime Minister Rajiv Gandhi refashioned the Indian economy and planning to include a more proactive approach towards this community. A Special Coordination Division in the Ministry of External Affairs was established in 1985 as the nodal agency to coordinate matters relating to Indians outside the country. The potential of this diaspora was officially recognised ‘as a reservoir of skill, expertise, technology and investment for the benefit both of the country of their adoption and the land of their origin’. The government started approaching diaspora networks and supported initiatives such as the Global Convention of Overseas Indians (first convened in New York in 1989) aimed at bringing diasporic Indians across the world to a common stage.

Another occurrence which has compelled me to argue for pre-dating the period of active diaspora engagement to 1985 was the avant-garde transformation of the Indian telecom sector. In an economic-bureaucratic regime still dominated by quota-permit norms, this sector was spearheaded by a diasporic Indian, Sam Pitroda, who continues to play a pivotal role in the state’s enunciated vision to transform India. Pitroda has served as the chairperson of the National Knowledge Commission and, more recently, as advisor to the prime minister on public information infrastructure and innovations, while also heading the National Innovation Council. Pitroda constitutes one of the huge cohort of Indian students who emigrated to the United States for higher education in the area of technology where he notched up numerous professional achievements in the field of telecommunications. His talent was noticed by Rajiv Gandhi, who was envisaging a new India inscribed with modern technology. Pitroda was entrusted to start the Centre for Development of Telematics to facilitate the development of India’s telecommunications industry, and within a matter of a few years the country registered a revolution in the telecom sector. He is one of the pioneers who envisaged that technology could better deliver services to India’s underprivileged. Pitroda’s contribution to the economy led to the ostentatious trend of involving diasporic expertise and knowledge to enhance the development of specific economic sectors.

In the summer of 1991, a significant change in development policy and orientation occurred when the government initiated a series of reforms in the wake of a severe economic crisis. These economic reforms not only redefined the character of the Indian economy but also rearticulated the country’s engagement with the rest of the world and allowed for foreign intervention in its development strategy. Since a reliance on foreign sources was inevitable in order to meet demand for foreign exchange to fund crucial imports, the then Finance Minister Manmohan Singh turned to the diaspora, or non-resident Indians (NRIs) as they were popularly called, for help. This elite segment of the Indian diaspora, mostly professionals located in North America and Europe, had acquired considerable wealth and resources and the Indian government wanted to tap their resources to bail out the economy. Though not as erudite and visible as their highly skilled counterparts in the West, Indian emigrants in the Gulf region had similarly shown their economic potential by contributing significantly to India’s economy through the inflow of remittances, which had reached US$3,289 million in 1991. This attempt by the Indian government to mobilise the resources of the Indian diaspora amended the perception of citizens at home towards this diaspora—they were now a ‘valorised subject’ rather than people who could not be trusted. This changed the nature of the relationship between India and this diaspora, from one that was essentially based on culture and emotion to one that was clearly pragmatic. This change served as the raison d’être for a more stable relationship. For example, during the Gulf war in 1990–91, the Indian government responded promptly to evacuate Indian immigrants in the region.

When the right-wing-dominated Indian government conducted a series of nuclear tests in May 1998, the response of the developed world was moral condemnation and the imposition of economic sanctions. The government approached the diaspora, particularly those who had acquired considerable wealth and positions of prominence in their countries of settlement, for support to top up depleting foreign exchange reserves. On an experimental basis, the government offered the diaspora a special investment opportunity in the form of the Resurgent India Bond 1998. This bond, oversubscribed by the diaspora. This Resurgent India Bond generated about US$4.2 billion helped India withstand economic sanctions to a considerable extent. This encouraging response by the diaspora reinforced in the minds of the government and Indian citizens the enormous economic potential of the diaspora. The government subsequently began pondering seriously about drawing up a comprehensive and sustainable long-term strategy aimed at utilising the diaspora’s resources for development. Meanwhile, success stories of NRIs now constituted part of the national rhetoric to celebrate India’s rise and to announce its arrival on the world stage and its integration into the global order.

Global Indian Family: From 2000 Onwards

Despite the celebrations of the role of the Indian diaspora and attempts made to involve them in matters of home, the government did not have a comprehensive policy or structural set up to engage with this community. A parliamentary committee was instituted by the government to outline the economic strength, cultural concerns and potentialities of the Indian diaspora and to determine the possible contributions they could make to develop India. In order to overcome its short-sightedness in its approach towards the Indian diaspora, the government started an NRI/PIO. An NRI is a person who is a citizen of India, holds an Indian passport, but resides outside India. A PIO is a person who holds a foreign passport (except Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan), but who, at any time, has held an Indian passport or whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act 1955 with a division within the Ministry of External Affairs in 2000. This division was mandated to deal exclusively with issues relating to the Indian diaspora and to improve coordination among various government agencies to deal with diaspora-related matters in an efficient manner. In response to this long-felt need to understand the composition, complexities and concerns of the Indian diaspora, the government established the High Level Committee on Indian Diaspora in August 2000 to study the diverse histories of this community and to suggest ways in which they could contribute to India’s development. This was, according to the official narrative, the beginning of a new phase in India’s relationship with her diaspora, with the motherland sensitive to the hopes, aspirations and concerns of its vast diaspora and with the government willing to take ‘parental charge’.

High Level Committee on Indian Diaspora

On 18 August 2000, a High Level Committee on Indian Diaspora (HLC) was created by the government with former diplomat L. M. Singhvi as its chairman; he also served as additional secretary of the newly created NRI division of the Ministry of External Affairs. The HLC’s main tasks were to:

·         study the characteristics, aspirations, attitudes, requirements, strengths and weaknesses of the Indian diaspora and their expectations from India;
·         study the role that the PIOs and NRIs may play in the economic, social and technological development of India;
·         recommend a broad but flexible policy framework and country-specific plans for forging a mutually beneficial relationship with PIOs and NRIs and for facilitating their participation in India’s economic development.

Another important objective of this committee was to correct general apprehensions concerning the untrustworthiness of the diaspora which were quite prevalent among people at home. This was to be done by highlighting the achievements of the diaspora in order to forge a cohesive, rather than conflicting, relationship between Indian citizens and this community.

The HLC’s first official attempt to map comprehensively the Indian diaspora resulted in its estimation of a population of about 20 million, spread over 134 countries. In this official mapping of the diaspora in terms of state-centric definitions and desires, the Indian diaspora, particularly the NRIs, was conceived as ‘a displaced global actor endowed with substantial economic prosperity that can be drawn into India through the powerful cultural attachment that “‘sons of soil” are believed, as well as expected, to retain for their motherland’. The HLC celebrated the success of the Indian diaspora who had helped to change world opinion in favour of India, though the committee also took the credit for these success stories in a subtle manner, primarily to remind the diaspora of their obligations to their homeland.

The low levels of involvement by the diaspora in India were attributed by the HLC to several factors, including bureaucratic hurdles, corruption and lack of transparency. The HLC considered it essential for India to create the necessary structures to facilitate interactions between home and diaspora.1717. HLC, p. xxi.View all notes In response to the HLC’s extensive recommendations, the government initiated a series of legislative measures, economic reforms and cultural diplomacy actions that can be divided into four broad domains, administrative, cultural, political and economic, all acting in concert to attract diaspora resources for development purposes and to help position India on the world map.

Ministry of Overseas Indian Affairs

The government established the Ministry of Non-Resident Indians’ Affairs in May 2004, later renamed the Ministry of Overseas Indian Affairs, as the nodal ministry for all matters relating to the Indian diaspora. Positioned as a ‘service ministry’, its mission is to ‘establish a robust and vibrant institutional framework to facilitate and support mutually beneficial networks with and among overseas Indians to maximise the development impact for India and enable overseas Indians to invest in and benefit from opportunities in India’.

In order to draw upon the experiences and knowledge of eminent members of the Indian diaspora, the MOIA instituted the Prime Minister’s Global Advisory Council of Overseas Indians in January 2009. This council was to provide inputs for policy formulation, programme planning and the direct involvement of the prime minister in the processes involving the Indian diaspora.

The MOIA initiated several service divisions and schemes to address the concerns of the Indian diaspora, particularly those who were not so privileged. In 2008, it started the Indian Council of Overseas Employment (ICOE) as an advisory body. The ICOE undertakes empirical, analytical and policy-related research, documents good practices, and provides assistance in the form of capacity building for stakeholders at the provincial level.

A large number of diasporic Indians, particularly those in the Gulf region and Southeast Asia, work as low-skilled workers and face a number of challenges including fraudulent methods of recruitment by employers who exploit them. The MOIA has started an Overseas Workers’ Resource Centre to provide support services for intending emigrants.

In addition to these administrative/executive initiatives at the central government, several state governments, particularly those with a large diasporic population, also established exclusive administrative institutions to facilitate their engagement with this diaspora. These institutions include the Non-Resident Keralites Affairs Department, NRI Division in Gujarat, and the NRI Commissioner in Andhra Pradesh and Punjab. These institutions invoke regional and ethnic affiliations such as Keralite, Gujarati and Punjabi identity to secure the attention of diasporic Indians.


The government emphasised culture when approaching the diaspora as a means to reinforce their cultural attachments to India. The government invoked certain cultural symbols to appeal to the diaspora and to emphasise their sense of belonging to India. One such cultural metaphor was reference to India (their country of origin) as the ‘motherland’. Such rhetoric was to remind the diaspora not only about their belonging to India but also of their loyalty and obligations to the motherland. The most visible spectacle of these cultural symbols is the PBD, or the day to commemorate diasporic Indians, an event organised annually since January 2003. The choice of 9 January as the date to celebrate the PBD had high levels of symbolism; Mahatma Gandhi, now designated as the greatest diasporic Indian, returned from South Africa on this day in 1915. Articulating the rhetoric of the association between the home and diaspora, or the link between ‘mother India’ and ‘children abroad’, the PBD aimed at bringing the diaspora home as well as showcasing the achievements and opportunities the post-colonial home nation could offer—a home that the diaspora could take pride in. This rhetoric of a singular Indian identity has dominated the discourse of the PBD. This rhetoric was best articulated by Prime Minister Vajpayee in his speech when he introduced the PBD. This emphasis on the ‘oneness’ of the diaspora is not restricted to the Indian government at the time of the conceptualisation and celebration of the first PBD. It was motivated by right-wing ideologies based on nationalist ideas, though a sentiment also shared by the subsequent liberal-inclined United Progressive Alliance government. United Progressive Alliance was formed as a coalition by the national political party Indian National Congress after the 2004 general elections. Some of the prominent constituents of this coalition at the time of formation were the Bahujan Samajwadi Party, Samajwadi Party, Trinamool Congress, Communist Party of India, Communist Party of India (Marxist) and Dravida Munnetra Kazhagam. However, many of these have left the alliance over time.

Of equal rhetoric was the call made to the diaspora to participate in the ‘motherland’ and to play a crucial role in repositioning India in the new world order as a strong and dynamic economy:

When you left this country, you carried with you the primary colours of the Indian ethos. A cross-fertilisation of cultures over time has added new shades to those vibrant hues. Today we invite you to brush in some of these new colours onto the ever-evolving canvas of India’s development.

The government wanted the riches of the diaspora but used an emblematic language to articulate and tone down its primary intent: ‘We do not want only your investments. We also want your ideas. We do not want your riches, we want the richness of your experiences’. This veneer of the poetic Vajpayee continued even under the administration of the rather impassive Prime Minister Manmohan Singh: ‘I would like you to reach out and invest in a new India. Invest not just financially, but intellectually, socially, culturally and, above all, emotionally’.

The government’s primary intention, however, despite this rhetoric of cultural proximity and emotional belonging, was difficult to hide. The fact was that the Federation of Indian Chambers of Commerce and Industry (FICCI) was the facilitator of the PBD. The FICCI went on to organise trade shows, state pavilions and business meetings, underlining the pragmatic political-economic priorities of the PBD event.

The PBD represented a distinct shift in the policies and rhetoric of the government toward its diasporas, a change necessitated by its ambition to redefine its place on the world stage and promote the neoliberal economic strategy it had adopted. However, the essentialist notion of oneness—the creation of a ‘global Indian family’ tied to a nation—to extend the sovereign domination of the government over a transnational population ignores the historical and territorial narratives of difference within the Indian diaspora(s). This leaves enormous possibilities of misappropriation and manipulation of this diaspora(s). The Indian government is also unaware of the implications of such rhetoric on the descendants of immigrants in countries such as Malaysia, Singapore and Fiji. Ethnic Indians, now the third or fourth generation descendants of migrants from India, encounter serious problems convincing the indigenous populations of Malaysia and Fiji that their loyalty is only to the country of their birth. A similar problem is now emerging among the descendants of migrants in Europe, North America and Africa, a factor contributing to growing inter-ethnic tensions.

Another symbolic cultural initiative of the Indian government was the introduction of the Pravasi Bhartiya Samman Awards (Honour of the Diasporic Indians). These awards are presented by the president of India during the PBD, in appreciation of the significant contributions by individuals or organisations of the Indian diaspora. These awards apparently have helped to enhance India’s prestige in the countries of residence of the recipients of these awards. These awards have been conferred on many individuals and organisations, including several academics (Jagdish Bhagwati, Meghnad Desai, Bhikhu Parekh and Dipak Jain) and politicians such as Malaysia’s S. Samy Vellu.


Engaging the diaspora and reclaiming them as transnational components of the nation necessitated the rearticulating of ‘belonging’ and of entitlements as well as a review of erstwhile discourses of nation and citizenship. In the nationalist discourse, largely dominated by the Nehruvian perspective, citizenship of India involved the right to participate in the political process. This right was strongly guarded and embedded in the territorial markers stipulated in the Citizenship Act of 1955. In this national citizen paradigm, non-citizens, including former citizens, were the subject of suspected loyalty to India. However, once the government started re-engaging its diaspora, demands began gaining ground that diasporic Indians should be distinguished from other foreigners. The only way to make this distinction was to recognise their ‘roots’ and redefine the parameters and labels of belonging and by granting citizenship or ‘citizen-like’ rights and privileges in India while allowing the diaspora to retain their citizenship in the countries of their stay or their birth.

The government needed to modify the normative structures of belonging in order to strengthen this bond (emotional and cultural) and facilitate the diaspora’s contribution to India’s development. To build on the potential advantages this diaspora offered, a form of ‘flexible citizenship’ in a now de-territorialised nation was proposed. In December 2003, parliament unanimously passed a bill to amend the Citizenship Act. Subsequently, the Overseas Citizenship of India Scheme (OCI) was launched in August 2005. Initially, the scheme was only available to the PIOs of 16 countries in North America, Western Europe and Australia. In December 2005, it was extended to the PIOs of all countries except Pakistan and Bangladesh. OCIs were now on par with the NRIs in various aspects, including travel, investment, education and property. This, however, was not to be misread as ‘dual nationality’ as it did not confer political rights. The OCI tag received an encouraging response from the Indian diaspora (specifically the PIOs). By 14 February 2012, a total number of 1,029,131 PIOs had been registered as OCIs.

Another significant step by the government to foster the feeling of belonging in Indians outside India was by granting voting rights to Indian passport holders staying abroad; this was done by passing the Representation of Peoples Amendment Act 2010. This amendment allowed the NRIs to get their names included on the electoral roles, thereby enabling them to participate in electoral processes in India.


Since the raison d’être for India’s engagement with the Indian diaspora was to secure economic contributions to develop India, the initiatives taken by the government in this domain were crucial. Interventions in the economic sector were also necessary as the government had to overcome a lack of trust among diasporic Indians based on their previous experiences in the country—cheating, fraud, cumbersome bureaucracy, corruption—and to ensure that financial transfers and property rights flowing from their investments were well protected. These initiatives were primarily of two types: first, creating certain institutions to facilitate the exchanges and involvement of the diaspora and to protect their interests; and second, initiatives related to fiscal measures. The government was already pursuing a policy of incentives and liberal norms conducive for the diaspora, such as higher interest rates on monetary deposits. However, considering the ambitious schemes of diasporic economic involvement that the government was envisioning, several facilitating and coordinating agencies were urgently required.

The first and most crucial institution that was established was the Overseas Indian Facilitation Centre (OIFC), in 2007 and in partnership with the Confederation of Indian Industry. The OIFC’s main objectives were to secure Indian diaspora investments, facilitate business partnerships, function as a clearing house for all investment related information, and provide advisory services to investors about opportunities and trends in the Indian economy. Diaspora philanthropy constitutes an integral part of the ‘diaspora development’ paradigm, and to streamline this sector the government instituted the Indian Development Foundation of Overseas Indians (IDF-OI). The IDF-OI was to serve as a credible institutional avenue to engage in philanthropy and social entrepreneurship to help advance India’s social development.

Initiatives related to fiscal measures included tax exemptions for diasporic investments, providing higher interest rates on such investments through dedicated savings and deposit mobilisation schemes such as the NRI accounts, automatic clearance of business proposals after a stipulated time, changes in regulation of foreign exchange, and foreign direct investment (FDI) incentives such as allowing the Indian diaspora up to 100% ownership in civil aviation, real estate and education ventures.

Responses from the Diaspora

According to the government, ‘India has been deeply appreciative of the support of the Pravasi Bhartiya community, at times of need. However, as noted earlier in this study, the capacities and interest of people of Indian origin worldwide vary enormously according to their class composition and their location. As a result of this, India’s engagement with people of Indian origin has taken on many different forms and occupies so many different spheres. These forms range from levels of personal family ties to business ventures involving international financial markets.

A review of the responses of people of Indian origin underlines the complexity of their different historical trajectories in their different territorial and temporal locations. This diverse community cannot be bundled together and presented as a homogenising singular block called the Indian diaspora. It is evident that the descendants of Indian immigrants have not responded to calls by India to invest in its economic development. This diaspora cannot be labelled as the lost children of India. The responses made by descendants of Indian immigrants in regions such as Southeast Asia need to be read differently because the metaphors of belonging and obligation to the ‘homeland’ may have a different meaning for them. India’s burgeoning economy with its rapidly growing middle class could well serve as an ideal investment opportunity, one that is made by this diaspora without subscribing to the government’s nationalist imagery of common Indian identity.


In the ‘diaspora development’ paradigm, remittances are considered ‘an important and stable source of external development finance’ which can have profound implications for economic growth. Remittances help reduce poverty, increase smaller business investments, contribute to higher expenditure on health and education, and build up human and financial capital. Remittances occur in two forms: direct fund transfer from a person abroad to one in India who is usually from the subaltern class; and local withdrawals from NRI accounts held by elite and professional segments of society. India has emerged as the top country in terms of inflow of remittances, receiving 12.5% of the total inward flow of such transfers in the world and 66% of total inflows in South Asia. From a modest US$2,384 million in 1990, inward remittances grew astonishingly to US$63,663 million in 2011.

The initial primary source of these remittances was the Gulf. In 1990–91, remittances from the Gulf constituted 40% while the share from North America was 24%. Later North America replaced the Gulf as the most important source of remittances. In 2006, the share from the Gulf declined to 24% while remittances from North America swelled to 44%. However, in 2011–12, a sharp decline from North America was registered with a modest increase from the Gulf, making the latter the highest contributor, though by a modest margin. According to a 2012 report, 30.8% of total foreign remittances came from the Gulf while 29.4% was from North America.

While evaluating the impact of remittances, the foremost issue is the utilisation pattern. Other important factors are size and frequency of remittances. Higher use of remittances for consumption means reduced capital formation. Frequent remittances of a lesser amount indicate that the money transferred is used for family maintenance while less frequent and a larger amount of remittances suggests that they are for investment purposes.

A recent survey of remittances reveals that about 61% of its total was for consumption purposes (see Figure 3).
Figure 3. Average utilisation pattern of remittances in India. Source: RBI Bulletin April 2010.


Similarly, 58% of remittances were of less than Rs50,000, while 15% of them were of less than Rs5,000. Of great surprise and cause for celebration by the Indian government was that of the total figure of US$60 billion, 9% of these remittances were less than Rs1,000 (see Figure 4).
Figure 4. Size of remittances by overseas Indians (%). Source: RBI Bulletin April 2010.

In terms of frequency, 65% of remittances were received every three months or less, while 42% were received once in a month (see Figure 5).


Figure 5. Frequency of remittances by overseas Indians (%). Source: RBI Bulletin April 2010.

An interesting feature of remittance flow was regional distribution, which has been termed the pocket pattern. A survey conducted by the Centre for Development Studies indicates that Kerala received the highest remittances, while Tamil Nadu, Andhra Pradesh, UP and Punjab received Rs1,568,060 million or 70% of the total Rs 2,212,200 million received as overseas remittances in 2008. Even within Kerala, three districts, namely Thiruvananthapuram (14.1%), Thrissur (13%) and Malappuram (15.3%), receive about 43% of the remittances.

While the total figure for remittances appears high, this constitutes a relatively low proportion of India’s gross domestic product (GDP). It continued to fluctuate between 3.29% in 2001 and 3.9% in 2010. In 2012, in Tajikistan, it was 47%, while in the South Asian neighbouring country of Nepal it constituted 22% of GDP.

A critical review of the astonishing figure of US$70 billion in remittances would indicate that these cash transfers by themselves cannot serve as a panacea for India’s development. Steven Vertovec (2009 Vertovec, Steven (2009) Transnationalism. London: Routledge) and Devesh Kapur (2010 Kapur, Devesh (2010) Diaspora, Development and Democracy: The Domestic Impact of International Migration from India. Delhi: Oxford University Press note that remittances induce higher consumption spending, inflation in the price of land, housing and food, disparities between remittance receivers and non-receivers, and eventually a culture of economic dependency. In Kerala, which receives the highest proportion of remittances, UNCTAD’s 2011 Impact of Remittances on Poverty in Developing Countries study revealed that while the state’s average per capita consumption was below the national average in the 1980s, between 1999 and 2000 the average consumption had exceeded the national average by 41%. The primary reason for this was attributed to the swelling volumes of remittances in Kerala. Another visible indicator was rapidly swelling property prices, particularly in the housing sector, which had gone up by almost 20% in Kochi, Thiruvananthapuram and Kozhikode, much more than rest of the country. According to the 2012 National Housing Bank survey, Kochi registered the highest rise in house prices, which went up by 10% between July and September 2012; July to October is the peak period in NRI remittances, contributing to activities at home. Meanwhile, in mega-cities such as Delhi and Mumbai the increase was 3.8 and 0.5%, respectively.

This should not undermine the fact that even the most basic consumption activities have a multiplier effect on development, though this is strictly limited. The immediate direct impact of remittances is poverty reduction, but as it occurs in India, it is leading to overdependence on this inflow of funds from abroad. Since emigrants are not able to accumulate capital to generate income at home, they are forced to stay abroad, even if under distress. While the Indian government has been successful in mobilising the remittances from the diaspora, the bigger challenge is to capitalise on this for a sustainable form of socio-economic development.

Foreign Direct Investment

The financial engagement of the Indian diaspora through FDI has been modest compared with the money they have remitted. For several years now, inflow of remittances by the Indian diaspora has crossed not only the FDI by this community but also total FDI into India. A recent report by the Reserve Bank of India (RBI) indicates that total FDI in India for 2011–12 was US$46.84 billion compared with US$66.13 billion remitted by the diaspora. The share of Indian diaspora in the total FDI has never been very significant compared with the situation in China. In the 1990s, Chinese FDI in China’s economy was 20 times higher than the FDI in the Indian economy. However, there was a marked increase, with intermittent decline, in the FDI following liberalisation of the economy. FDI in India for 2011–12 was US$66.13 billion. In the initial years after liberalisation, the unfavourable regulatory regime and the hostility by the indigenous capitalist class were possible reasons for low FDI, particularly by the Indian diaspora. In the 1980s when an NRI industrialist from Britain, Swaraj Paul, tried to invest in India’s automobile sector, he faced severe hostility and obstruction from Indian industrialists. In recent years, some of the leading business moguls of Indian origin such as Laxmi Nivas Mittal (of British-based steel-producing giant Arcelor Mittal) and Anil Agarwal (of British-based Vedanta) have started or have proposed to initiate massive FDI, primarily in sectors related to mining and metal. These initiatives have raised serious concerns about the human and ecological costs of these initiatives and have been opposed by a cross section of the Indian population. The only exceptions are the IT and services sectors where diasporic entrepreneurs have played an important role through FDI and technology transfer.

Owing to certain ideological and structural issues, FDI in India remains a controversial issue and this has seriously limited its utilisation as a channel for financial engagement with the India diaspora. India’s attempts to attract FDI from the diaspora have raised concerns particularly because of enormous FDI from Mauritius, a small island with the majority population being people of Indian origin. Since 1995, Mauritius (total GDP in 2011 was US$19.29 billion) has been India’s largest source of FDI, contributing about 40% of the total FDI of US$55 billion in 2011–12. Interesting, and which raises serious issues regarding abuse of the taxation treaty, is that almost all of these investments come from a single building with 12 storeys, situated at 1, Cathedral Square, Port Louis; this raised serious concerns about round tripping of money. Round tripping or ‘Lazy Susans’ (a term used by the Wall Street Journal) is primarily the process of sending unaccounted money of one country, usually through informal, illegal channels, to another country with which it has a favourable tax treaty and then bringing it back as foreign capital investment which is tax exempted to save on taxes and the legitimisation of black money.


Philanthropy is a significant site of diasporic engagement and considered to have more long-lasting developmental impacts than direct remittances. A number of the Indian diaspora have established charities and run health services and education and public works projects in their home towns. Recognising the limitations of small individual forms of engagement, a recent trend is one where individuals are pooling their resources for larger philanthropic projects such as setting up of the American-India Foundation (AIF), funded by US citizens of Indian origin. AIF is devoted to ‘accelerating social and economic change in India by connecting communities and resources across the US and India. AIF’s grants are focused on education and livelihood projects with a particular emphasis on primary education and women’s empowerment’. Even government agencies are encouraging more structured philanthropic initiatives; one such engagement, initiated in Punjab, is ‘Mera Pind’, where diasporic Sikhs have facilitated development in their native villages.

The negative side of diaspora philanthropy, however, is that it is driven by notions of belonging in the Indian diaspora involving region, religion, caste and ethnicity. Such philanthropy therefore has limitations in the efficacy of its forms of engagement. It has also led to sectarian divides and regional imbalances. Autar Dhesi Diaspora intervention in rural development: Boon or bane, in Dusenbury, Verne A. and Darshan Singh Tatla (Eds.), Sikh Diaspora Philanthropy in Punjab: Global Giving for Local Good. Delhi: Oxford University Press, argues that while the role of the Punjabi diaspora’s philanthropic works in the development of rural Punjab is much celebrated, its impact on the cultural sensitivities of the people in these areas has been ignored, including increasing caste-based political and social divides by institutionalising communalism. Other academics have questioned the very genuineness of these initiatives:

For diasporans, achievements of wealth and status are hollow unless they can display them before an audience living elsewhere, at home … This means, in effect, that diasporans must constantly confront their invisibility through active acts of mobilisation and hospitality, and through public demonstrations of generosity which reach out beyond their locally constituted territorial communities. Imagined Diasporas among Manchester Muslims: The Public Performance of Pakistani Transnational Identity Politics.


The government of India is no longer oblivious of the communities of Indian origin abroad, increasingly celebrating the success stories of these people while also recognising the potential they offer for the country’s development. The government has made proactive efforts to engage these communities, and people of Indian origin abroad have responded to these initiatives, making significant contributions in several tangible and intangible forms. However, there are segments of the Indian diaspora, particularly the ‘old diaspora’ or the descendants of Indian migrants who are citizens in their countries, who have not responded in the ways expected by the government of India.

A close review of this debate about diaspora and development and development through diaspora indicates two crucial points: first, a very strong penchant for the elite classes of diaspora, or the dollar diaspora, to invest in India; and second, that there are several missing links in this narrative. The first missing link is the callous failure of the Indian government to make a distinction between first generation migrants who may return to India (or in the case of the Gulf, have to return to India) and the descendants of emigrants from India born and bred as citizens of other countries. Another such missing link is the exploitation of this diaspora in their destinations, particularly in the Gulf, which includes severe restrictions on employment, personal life, withholding of passports, etc. Another is the trap created at home in order to realise the ‘émigré dream’. The cost of emigration is very high (an average of about Rs57,000), which many of the intending emigrants cannot afford. They therefore fall into the trap of moneylenders, which substantially reduces the benefits of earning abroad, while creating difficulties, even extreme hardships, for families back home. The third missing link is the hype about employment generation. A study about Kerala shows that 64% of the emigrants were already gainfully employed at home; this draws attention to the possible labour crises at home because of the emigration of the working population.

In development planning, an overestimation of the economic potential of investments by the India diaspora and the copious concessions made to them without cautious checks may result in manipulation of these policies. One such case is that of FDI from Mauritius. A careful evaluation is also required of the extent to which these economic responses by this diaspora are the outcome of policies oriented towards them or because of the general macroeconomic reforms India has been pursuing over the past two decades. A focus on the bloating inflow of remittances and financial transactions involving this diaspora may serve only to blinker the entire debate of equitable development and human costs.

The policy initiatives by the Indian government to engage the diaspora for development have redefined the normative ways in which the relations between nation, citizens and diaspora have been articulated and negotiated by the neoliberal post-colonial state. A critical analysis of the stark similarities in the neoliberal policy suggestions by the Indian state and institutions such as the International Monetary Fund and the World Bank indicate an unambiguous influence of such neoliberal directives. The observations of the noted anthropologist Aihwa Ong on neoliberalism and citizenship illustrate this crucial link in no uncertain terms:

Neoliberalism interacts with regimes of ruling and regimes of citizenship to produce conditions that change administrative strategies and citizenship practices. It follows that the infiltration of market logic into politics conceptually unsettles the notion of citizenship as a legal status rooted in a nation-state … The elements that we think of as coming together to create citizenship—rights, entitlements, territoriality, a nation—are becoming disarticulated and rearticulated with forces set into motion by market … citizenship elements such as entitlements and benefits are increasingly associated with neoliberal criteria, so that mobile individuals who possess human capital or expertise are highly valued and can exercise citizenship-like claims in diverse location.

The scope of this study should not be misconstrued as making a case against the discourse of ‘diaspora and development’. However, when the size of more than 15% of that glowing figure of US$60 billion in a year remitted in India constitutes for less than Rs5,000 (about US$80), we need to look beyond the glitz and glamour of this astounding figure because this indicates more towards a push-driven sustenance-oriented migration flow, rather than a panacea for capital crunch for development of the economy. A much deeper analysis of the policy initiatives, without being callous towards the ‘human’ aspects of the domain, in terms of lessons learnt, specific contexts of functioning and who they have reached with what effect is necessary to realise the goals of such initiatives.