India: Source country for human capital
The global economic outlook towards the end of 2008 took a downward dip with the global financial crisis. India’s economic growth in the second quarter fell by 1.3 percent to 7.9 percent over the same period in 2007.1 According to Montek S. Ahluwalia, Deputy Chairman of India’s Planning Commission, India’s economic growth for 2008-2009 had moderated from 9 percent to between 7 percent and 7.5 percent due to the global financial crisis. He added, “Even if you take growth at 7 percent, it is 2 percent less than what we have had but still higher than what we had four years ago,” he added, “This is not an Indian crisis. We are being impacted by a global crisis.”2 Reportedly, the Indian economy was growing between 6 to 7 percent in 2009 amidst signs of a global economic recovery. In order to boost the domestic economy, the Reserve Bank of India (RBI) reduced the interest rate the RBI uses to inject short-term money into the banking system (repo rate) to 4.75 percent from 5 percent.3 In terms of employment outlook, the job market in India in the third quarter of 2008 was a mixture of caution and optimism. In mid-2009, India recorded a 6.7 percent economic growth rate,4 which was one of strongest growth globally apart for China. The aim of this chapter is to examine the influence of the Indian economy on the outflow of professionals and skilled workers. Furthermore, despite India rising, there is a constant outflow of talent from India, suggesting the inability of the domestic economy to absorb its talent, or other motivations that are driving Indian professionals overseas. One possibility could be increasing competition by returning NRIs or the IIT and IIM graduates who are taking all the best jobs in India.