Fewer Indian Dollar Millionaires Are Migrating. China May Have More Reasons To Worry

A recent report on dollar millionaires moving to another country shows India losing 6,500 of its high-net-worth (HNI) citizens in 2023.

The figure, which is a projection based on actual trends till June, is a fall from the 7,500 reported in 2022.

There is some hand-wringing in some quarters over this outflow, which is hypocritical given the huge political negativity surrounding the creation and accumulation of wealth among India’s Left-liberal elite.

However, the perpetual political carping apart, the latest Henley Private Wealth Migration Report 2023 can be seen as the potential start of a trend reversal, though we must monitor this over the next few years to figure out whether fewer rich Indians are migrating abroad than before. 

A caveat is in order: the migration of wealth is a fact of life, for anyone who can afford it, seeks greener pastures. So there is no need for endless breast-beating over the wealthy leaving any jurisdiction over the short to medium term.

In fact, it is logical for India’s rich to seek fortunes abroad because that is where many are receiving higher education. Once you are educated abroad, to earn back the dollar sums invested, you have to earn in dollars. When rich kids get educated abroad, their wealth will follow in due course.

The only real remedy for this exodus of rich kids to Ivy League and non-Ivy League institutions is to build top-notch meritocratic institutions in India.

That is not really happening, and even good institutions are going to seed due to the political temptation to pander to electoral logic and inducting poor quality students and faculty in large numbers. Identity-based inclusion has huge downsides for the creation and retention of talent and wealth.

Coming back to the Henley migration list, while India will be dispatching fewer millionaires abroad this year, China and the United Kingdom will be seeing higher outflows.

The Chinese outflow is set to rise from 10,800 to 13,500, a 25 per cent jump. The Chinese rich surely don’t believe too much in the China story of the future. The Middle Kingdom, whose population is comparable to India’s, is losing twice as many millionaires.

The worst case is the United Kingdom, which is expected to see a doubling of millionaire exits from 1,600 in 2022 to 3,200 this year. Clearly, the UK’s own exit from the European Union and expected slide into recession this year is driving the rich out.

However, for India this is little more than schadenfreude. The real reason to see the 6,500 departures this year in a positive light is to see it in proportion.

First, of the 1,22,000 millionaires who will give up on their countries, 6,500 is just over 5 per cent. This is in sharp contrast to India’s share of total global population of 17 per cent. In short, those leaving India are not at unconscionably high levels.

Second, we are creating more millionaires than we are losing by a wide margin. According to a Credit Suisse Global Wealth Report in 2022, India’s dollar millionaires will more than double from 2021’s 7.96 lakh to 16.32 lakh — which means an annual average addition of 1.6 lakh millionaires. Contrast this with the 6,500 we are losing this year.

Third, India does not fare badly when you adjust our losses for population with countries that ought not to be losing their millionaires. Take South Korea, one of the richest countries in Asia. Henley says it could lose 800 millionaires this year, but adjusted for population (South Korea’s is 51 million versus India’s 1.42 billion), that number would add up to more than 22,000 millionaires leaving home if it had the kind of population India had. It is something for South Korea to worry about.

The takeout: India need not fret about losing its millionaires. We are headed in the right direction, and if we keep doing the right things continuously, our economy will grow and our rich will find richer pastures by investing their wealth here itself.

Remember: in terms of purchasing power parities (PPP), which indicates what a dollar can buy in terms of local currency, India’s PPP is 3.5 times its nominal GDP in dollar terms.

A dollar millionaire is essentially leaving 3.5 times his potential purchasing power by leaving India. Sooner than later, if ease of doing business and ease of living improve in India, the penny will drop. It’s getting much better back home.