Exit of Rich/report

June 15, 2023
Posted by: OptimizeIAS Team
Category: DPN Topics

Exit of Rich/report

Subject : Economy

Section: External sector

In News: Henley Private Wealth Migration Report 2023 has estimated that 6,500 high net-worth individuals (HNWIs) may leave India this year

Key Points:

7,500 HNWI from India emigrated in 2022.
- Overall 25 lakh Indians renounced Indian citizenship in 2022, the highest ever since 2011.
India’s figures are world’s second highest, after China, which is estimated to see 13,500 net exits
Reasons/ what it indicates:
- Discontent with the way things are (Present):
  - High level of crime or socio-political unrest
  - Restrictions on personal freedoms, lack of privacy, eg: China, Turkey.
  - Punishingly high taxes beyond a certain level of income
  - constraints on moving money out of the country get tightened (China)
  - Economic volatility (Turkey)
- Indicator of bad things to come (Future):
  - high-net-worth individuals are often the first people to leave — they have the means to leave unlike middle-class citizens.
  - Factors such as economic uncertainty, social (racial or religious) tensions, geopolitical tensions, environmental concerns.
- Countries offer various Citizenship/Residence by Investment programmes to attract HNWI to immigrate. Some of the famous programs are:
  - Portugal’s Golden Residence Permit Program
  - Canada’s Start-Up Visa Program
  - Italy’s Residence by Investment Program
  - EB-5 visa programme of the U.S.
- The top destinations are:
  - Australia– It tops as the most desired destination for immigrants because of its perceived safety, no inheritance tax, and strong business ties to China, Japan and South Korea. It also stands out for its sustained growth, having escaped the financial crisis largely unscathed and avoided recessions for the past 27 years.
  - UAE– It is second on the highest HNI immigration.
  - Singapore-It is third in rank of most desired destination
  - USA- It was the fourth most popular destination in 2023.
- The report is published by Henley & Partners, a firm specializing in residence and citizenship planning.
  - It also publishes the Quality of Nationality Index.

Who are Hight Net Worth Individuals

No fixed cutoff but generally those who have wealth of over $1 million or ₹8.2 crore are considered HNWI.
According to the Henley Global Citizens Report, there were 3.47 lakh such people in India in December 2021.
India ranked fourth in the world in terms of privately-held wealth, after the U.S., China, and Japan.

Citizenship/Residence by Investment programmes

A residence by investment program is a process that requires a foreign national to invest in another country in order to gain residence there. That foreign investor is then entitled to take up residence in that country and after a certain number of years apply for permanent residence.
Two such programmes are:
- Portugal Golden Visa -Purchasing property worth Euro 500,000 (₹4.4 crore) in a high-density area and creating at least 10 jobs for Portuguese nationals, are mandatory. Five years after the investment, the individual can obtain a Portuguese passport, making them eligible to visit over 150 countries without a visa.
- EB-5 visa programme of the U.S.- It requires a minimum investment amount of $800,000 (around ₹6.6 crore) over a period of 5 to 7 years and the creation of 10 permanent jobs for U.S. citizens. The visa makes an individual eligible for American citizenship after five years.