Investment by diaspora in Tamil Nadu, rhetoric and reality

Despite the many advantages that it has, the state has not been able to attract resources from the Tamil diaspora. What can be done?

Published: 16th February 2022 12:06 AM  |   Last Updated: 16th February 2022 09:45 AM   |  A+A-

cash, money, investment

Image for representation(Express Illustrations)

A conference was held in Chennai at the end of December 2021, which brought together representatives of the Tamil diaspora and specialists from the state. Organised by Dr V R S Sampath, a renowned scholar on diaspora, the focus of the seminar was on investments from overseas Tamils in the state, opportunities and challenges.

The organisers made special efforts to get top bureaucrats from the Tamil Nadu government to make presentations. They included, among others, S Krishnan, Dharmendra Pratap Yadav, R Selvam, N Muruganandam and S Pooja Kulkarni. They highlighted the state’s advantages—no power shortage, no labour unrest, excellent connectivity within the state and with the world outside, good banking and legal infrastructure, and scope for training a skilled labour force. I was hoping the bureaucrats would mention details of proposals received from the Indian diaspora in general, and Tamil diaspora in particular, and how many were sanctioned and how many are under consideration. Details of NRI-promoted projects and the sectors would have been helpful. A comparative study of TN with other states would have been of great help. Unfortunately they did not offer any information.

Despite its advantages, the state has not been able to attract resources from the Tamil diaspora. A former TN Minister and currently an eminent educationist, who presided over a couple of sessions, highlighted two points. He alluded to widespread corruption that has affected both the state and society. He also contrasted diaspora Tamils with overseas Chinese who have contributed nearly 70% of Foreign Direct Investment since the days of economic transformation in the mid-1970s.

Given below are a few illustrations to substantiate his observations. Between April 2021 and June 2021, India recorded its highest Foreign Direct Investment equity inflow. Singapore was at the top with $3.31 billion followed by Mauritius with $3.29 billion. According to perceptive economists from our country, Mauritius is one of the main places where Indian operators convert their black money into white and bring it back to the nation.

During 1991–96, the state government leadership got entangled in several corruption cases. The Republic of Singapore, at that time, was very keen to diversify its investments. Naturally, TN figured very high in their calculations. According to unimpeachable Singapore sources, there was demand for a huge sum of money to be deposited in dollars in a Hong Kong Bank. Frustrated, it turned to Chandrababu Naidu. who rolled out a red carpet for Singapore business houses.

The 2G Spectrum scandal rocked the second term of Manmohan Singh government. Many TN politicians were detained for interrogation. Though the Special Court acquitted them for lack of evidence, the stigma persists. As the eminent educationist observed, TN has to get rid of this image before it becomes an attractive location for FDI.

I G Patel, economic advisor to successive governments, has narrated an important trait of non-resident Indians. In the 1980s, to attract foreign exchange, the GoI permitted NRIs to open accounts in SBI in dollars, earn interest in that currency and withdraw the money in it. And when India was engulfed in a severe financial crisis and gold from the Reserve Bank’s vaults had to be airlifted to London as mortgage for international financial loans, there was a scramble from NRIs to close their accounts. Delivering the Lal Bahadur Shastri Memorial lecture in New Delhi, Patel lamented: “The non-resident Indian may have his heart in India, but he would prefer to keep his money in Swiss banks.”

Southeast Asia is a fascinating laboratory to compare and contrast the Overseas Chinese and Indians. 1) The Chinese presence in Southeast Asia is substantial, 30 million, whereas the Indian presence is just 5 million. Except in Malaysia and Singapore, where Indians constitute 9% and 7.5% of the population respectively, they are a miniscule minority elsewhere. In Burma, which was part of British India until 1937, Indian presence was large, but many of them came back here voluntarily or they were edged out after the introduction of socialist policies. According to the Singhvi Committee Report on Indian Diaspora, nearly 400,000 people of Indian origin in Myanmar are stateless. 2) The Chinese dominate the economic life of all Southeast Asian nations whereas the role of Indians is negligible. In Malaysia. Indians own only 1.4% of the national wealth. In Singapore, while Indian expatriates are an object of envy and admiration, the per capita income of a Singapore citizen of Indian Tamil origin is less than the national average. In Malaysia, the plantations have disintegrated and Indian workers were compelled to move to urban areas as squatters. Without education, they have been lumpenised and criminalised. 3) The ethnic tensions in Southeast Asia revolve around interaction among the indigenous people and Chinese minorities. There had been anti-Chinese riots in several countries at regular intervals. And whenever and wherever China had tried to protect the interests of the Overseas Chinese, it had led to deterioration in bilateral ties. During recent years, the Indian community is also getting involved in ethnic tensions; for example, there has been violence against the Indian workers both in Malaysia and in Singapore.

The Conference had one session devoted to poverty alleviation, but none of the panellists referred to the manifold problems relating to the vulnerable sections of Tamil diaspora—statelessness in Myanmar, the lumpenisation of Indian squatters in Malaysia, destruction of Hindu temples there, and the tragic events that culminated in communal riots in “Little India” in Singapore. Can the state remain silent when its children are subjected to humiliation?

The role of the diaspora in China’s economic transformation is considerable. When Lee Kuan Yew visited China in 1976, he told Deng Xiaoping that Overseas Chinese formed only 4% of Chinese population, but owned four times its national wealth. Deng was impressed with the city state’s progress and he emulated the Singapore example in many ways. Goh Keng Swee, who brought about the “Singapore miracle”, advised China on how to develop export promotion zones.

It must, however, be underlined that India’s progress has been accomplished under a democratic setup. Whereas China has undergone several upheavals—the Great Leap Forward, Cultural Revolution and Tiananmen Square massacre—that have cost millions of lives. What is more, in a world of shrinking geographical boundaries and widening intellectual horizon, no nation, not even China, can remain insulated for long. The winds of democracy and upholding of human rights will have its fallout there too.

In his address to the US Congress, the then PM Narasimha Rao underlined one unique feature of India, which remains valid even today. The transition from a closed, protected economy to an open, export-oriented economy has been very smooth; what is more, the reform process enjoys support cutting across India’s diverse political spectrum.

V Suryanarayan


Senior Professor (Retd), Centre for South and Southeast Asian Studies, University of Madras

(The author was the Founding Director of the Centre in the University of Madras)


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