Migration Obvious Choice if Nothing Improves

Surjit Bhalla, economist and former executive director at IMF for India, Bangladesh, Bhutan and Sri Lanka, speaks to Parth Singh about why many Indians are choosing to migrate. Edited excerpts

- Parth Singh

What's behind the recent surge in migration from India?

Migration is driven by multiple factors. People leave not only for better opportunities but also to escape excessive regulation, bureaucratic hassles and declining quality of life—issues highlighted in the Economic Survey by the CEA [chief economic adviser].

Factors like pollution, lack of clean water and everyday harassment contribute significantly. High taxation can be a burden, but the broader issue is how regulations impact daily life.

When real incomes are rising, people tolerate certain challenges. But when nothing seems to be improving for you, migration becomes an obvious choice.

Is India over-taxing its people?

The evidence is quite strong. While at the IMF [International Monetary Fund], I analysed the tax-to-GDP ratio and found that India's aggregate tax burden was among the highest in the world for its income level. Typically, tax-to-GDP ratios rise as economies develop, but India's ratio has already reached around 19%.

Do Indians move abroad because the taxes aren't justified?

The reason is that when we analyse real income, it becomes evident that salaried workers have seen no significant increase in their earnings for the past 14 years.

Since 2011, the average CPI [consumer price index] inflation has been around 5%. Now, in most countries—especially developing ones—taxation is based on nominal incomes, not real incomes.