Archive | March, 2014

Education and bilateral relations

A significant number of Indian students in the United States add great value to both countries, while flying under the radar of bilateral policymaking.

Migration is the foundation stone of India-US relations, if not the bedrock itself. Indian immigration into the United States of America has come a long way since Bhagat Singh Thind fought for citizenship in US courts about 90 years ago.

While the China-US economic relationship leans heavily on trade via the movement of goods, the India-US economic relationship is based more on the movement of people and services. Apart from a sizeable population of Indian origin in the US of about 2-3 million, Indian citizens also form the highest number of H-1B and L-1 visas, both dominated by technology and software professionals.

At Takshashila, we recently had an excellent talk on US immigration policy by Edward Alden, Senior Fellow at the Council for Foreign Relations. This blog post is limited to a few observations on immigrant Indians studying in the US on student visas.

A little over 23,000 Indians availed a US student visa in FY2012, less than 5 percent of the overall student visas issued in the country. This is down from FY2007 as the chart below shows, when Indian students availed more than 10 percent of all student visas issued. In contrast, Chinese students are being issued with visas at a rapidly increasing rate since 2007, and now hover close to 200,000 student visas a year.

US F1 Visas Total

This rapid increase in Chinese students studying in the US has received some policy response from the Americans, with the US government expressing a desire to bridge the gap between the number of Chinese studying in the US and the number of Americans studying in China. While there appears to be state support promoting Chinese students to study in the US, some reports have questioned whether they are getting sufficient returns on a US education. The increase in numbers likely stems from two factors: one, from rising incomes in China and two, from state support for foreign study. These numbers started going up before the global financial crisis and stayed high through out it.

Indian students in the US, while much smaller in number, arguably add greater value to the US economy per person. For one, Indians in the US are more likely to be studying at the masters or PhD level instead of an undergraduate education. This implies a higher threshold for selection, more number of years spent in the country, and a higher productivity and skill of the labour that comes after education.

Two, the number of F-1 student visas to Indians dipped slightly in FY2009, along with the overall number of F-1 visas issued. This was around the time of the financial crisis, a period when scholarships and university funding of masters and doctoral programmes started reducing in number, as well as the availability of jobs in the US started becoming uncertain. This implies a sensitivity of Indian students in the US to the American job market. This is in contrast to the increasing Chinese students who are likely to head back home immediately after education, at their rapid rate of increase.

Three, it is also likely that a higher proportion of Indian students are funded by US universities for their study, with the rupee-dollar exchange rate being unaffordable for most Indians. This could explain much of the drop in student visas between FY2008 and now.

US F1 Visas India China

The last decade in the US has seen a sharp rise in the number of Chinese students, a plateauing of South Korean and Indian students and a fall in the number Japanese students. The reasons for these changes can be multiple. Certain student cohorts are seen as revenue sources for US universities, certain others as high-skilled labour in research, tech and other sectors. The Indian student cohort, though small, punches above its weight. Binning luddite notions of ‘brain drains’, both US and India need to think about how they can enable the student cohort to do even better.

Immigration does not feature high on the agenda for strategic dialogue between India and the US, and student immigration even less so. It’s about time that people in Washington DC and New Delhi paid a little more attention to this as a policy issue much as it remains a social and cultural one.

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In Pragati: Spending for a Modern Armed Force

I write in Pragati–The Indian National Interest Review along with Rohan Joshi on the sorry state of defence modernisation in India:

As Ajai Shukla highlighted in February, only 4 percent of the 2013-14 capital budget is allocated for new acquisitions, down from 38 percent in 2010-11. The interim defence budget announced in February 2014 appears to do little to alleviate this systemic decline. Although a 10 percent increase in the defence budget was announced, there was only a paltry 3 percent increase in capital outlay, with revenue expenses garnering a large part of the increase. What little money will go towards defence modernisation from the overall capital outlay is as of yet unknown.

In the context of the budget, Mr Antony’s admission that there was no money left for the MMRCA deal in FY 2012-13 is surprising. Capital allocation for the IAF was increased in FY 2012-13 by 22 percent, conceivably in order to account for the first installment of Rs. 10,000 crore due to be paid to Dassault after the deal was to be signed in FY 2013.  If we are told that the IAF has spent all but 3 percent of its allocated capital acquisitions budget for FY 2013, where has the rest of the money gone?  The interim budget for FY 2014 has decreased the IAF’s capital allocation budget by about 15 percent (over FY 2013 beginning estimates) to Rs. 31,818 crore.  Worse, if the worrying trend of committed liabilities accounting for 95 percent of the capital acquisition budget lingers, this effectively means that the MMRCA deal cannot be concluded in FY 2014-15 either.
[Full Article: Spending for a modern armed force, March 14, 2014]

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