1. Understanding the Real and Virtual India!
There are two India's, one where we live and the other
is the Virtual India, with an estimated GDP of US
$ +240 billion per year, where about 20 to 25 million
NRI's and PIO's live.
Their hearts are in India and they are emotionally
tied to India. If we can attract them and woo them,
they could be a good source of funding projects
for India's growth plans.
The Chinese have learnt the art of wooing and managing
their NRC's who number about 55 to 50 million. Last
year the NRC's invested about US$ 70 billion into
China + Hong Kong + Macau. India, inspite of its
best efforts, received only US$ 0.2 billion from
NRI's last year!
India imports nearly US$ 8 to 10 billion worth
of Gold every year. This means that we have imported
nearly US$ 96 to 120 billion worth of Gold, in the
last 12 years, since liberalization of the economy.
We should try to find ways to 'funnel' this retail
investment into more economical areas, to benifit
the Nation and it's people.
2. How has China managed to get large FDI inflows from the NRC's?
Maybe, there is a lesson to be learnt by us, as
to how China is able to woo its NRC's!
The largest banks in Hong Kong, HSBC and Standard
Chartered, may be able to throw some light on how
the NRC's have been able to invest so much in to
China and Hong Kong.
FDI .... means Foreign Direct Investment
US$ 1 billion is Rs. 4900 crores
NRI .... means Non Resident Indian N.A .....
means not applicable
NRC ... means Non Resident Chinese **means
, estimated figures
PIO .... means People of India Origin
3. India's POT of GOLD : how can we get it back?
It is estimated that a large amount of "Indian Money",
is lying outside India, due to poor governance &
administration of India and due to past regimes
of controls and high taxation. If India can put
its House in Order, to near World Class Standards,
a substantial part of this money could easily come
back to drive the Indian economy.
Unofficial estimates of Indian funds lying outside,
range from US$ 400 billion to US$ 800 billion! India's
total foreign debt is about US$121 billion.
The interest rates are very low in the international
markets and interest rates are also dropping in
India. NRI's and PIO's would be interested to invest
in Indian paper with reasonable rate of interest
and attartive tax incentives.
The Indian Central and State Governments should
plan for 10-15-20 year Infrastructure Bonds, with
a coupon rate of 4 to 5%, both for domestic Citizens
as well as for NRI's, with tax breaks and incentives.
Or it could be a floating rate, based on some standard
base rate, + a premium of 100 to150 basis points.
India requires US$ 500 to US$800 billion for Education,
Health Care, connecting the Water Ways and Rivers,
for Ports, Airports, Railways and Roads.
After the 2nd World war, when Germany was devasted,
the German Government came out with a similar scheme
to build the Nation. China has had a novel scheme
for many years. It may be a good time to consider
such proposals. The present rate of borrowing for
Infrastructure Projects is too high!
4. Only Good Governance
and Effective Administration can attract higher
FDI into India and induce money to flow back.