India has lost the highest percentage of dollar-millionaires to migration since 2014, ahead of China and France, with the crackdown on black money being the most plausible reason for the exodus.
Nearly 23,000 dollar-millionaires have left the country since 2014, with 7,000 leaving in 2017 alone, taking India to the top of the exodus charts.
Data compiled by the team headed by Ruchir Sharma, head of emerging markets and chief global strategist at Morgan Stanley Investment Management, shows that 2.1% of India’s rich left the country compared with 1.3% for France and 1.1% for China. He presented the data at a media event last week.
Raw data for the analysis was provided by NW World, which conducted a survey of 150,000 millionaires.
“While some of the millionaires leaving may be desirable given the corruption drive, we have to be careful we do not throw the baby out with the bathwater,” Sharma told ET. “Which is collateral damage of the regulatory overkill.”
India will lose the economic benefit of investments and consumption by these super rich.
While internationally, the data compiled by Sharma shows, Auckland, Dubai, Montreal, Tel Aviv and Toronto are the most popular destination for the world’s rich, separate details are not available.
Anecdotally though, the UK, Dubai and Singapore are likely the most popular destinations for India’s high networth individuals that have chosen to leave the county. The number counts those who have physically moved and spend more than six months outside the country. It excludes those who have residences outside the country but have not moved.
Millionaires are defined as those with net assets of more than $1 million, working and living in the country including expats.
France is also among the top three countries with high exodus because of high taxes – new president Emmanuel Macron has slashed the contentious wealth tax blamed for the migration.
The United Kingdom has also seen some exodus of the rich the last year because of the country’s decision to leave the European Union.
In India, the anti-corruption drive seems to have created some “fear psychosis” with tough tax laws, black money drive and crackdown on corruption and non-performing loans pushing some of the rich to move to other countries.
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, gave one last chance to those holding unaccounted foreign assets one last chance to come clean through a disclosure scheme. Those found with unaccounted foreign wealth now face imprisonment if caught.