India needs to import more capital and export fewer workers

India is still reporting world-beating economic growth, but no longer getting any love for it.

- Ruchir Sharma

Flows of foreign money into the country have dried up, suggesting outsiders believe that the reported gross domestic product growth rate of over 8 per cent masks underlying weaknesses.

Most strikingly, corporate revenue normally grows (or shrinks) with the economy - in any country. But last year, corporate revenue growth for listed companies in India decelerated to barely half the GDP growth rate.

Rather than taking comfort in the headline real GDP figures, which are likely to be boosted by technical factors related to adjustments for inflation, policymakers would be wise to address some key fault lines.

Among the leading signs of weakness: India is losing more people and attracting a lot less money than it used to. This decade, a net total of 675,000 people emigrated each year, up from 325,000 in the 2010s. Only Pakistan, Bangladesh and Ukraine have seen a larger exodus while China is haemorrhaging people at the same pace as it did in the last decade, 300,000 a year.

A chunk of this outflow from India is “brain drain” - a loss of the skilled workers it needs to compete in advanced fields. As a result, one-third of Silicon Valley’s tech workforce is now Indian.