India Uncut

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Friday, July 01, 2005

Taxing success

Secular-Right India points to a Financial Express article that reports:
According to the report, ‘India and the Knowledge Economy: Leveraging Strengths and Opportunities’, released on Tuesday, the World Bank says by imposing an exit tax on IIT graduates and other professionals, who leave the country after receiving subsidised education, the government can collect over $1 billion (about Rs 4,400 crore) per annum. This figure is from students going to the US alone. Take into account professionals leaving for the Gulf and other countries, and the total could well exceed the collection from the education cess, which was around Rs 5,000 crore.
The money thus generated, FE says, "would be enough to sustain the mid-day meal scheme, plus there would be cash to spare for building schools in villages and strengthening the elementary education structure." Intention and outcome never match with our government, though, and putting extra fuel into a busted car will hardly help it down the highway.

Also, as Suman Sinha points out in this piece, the so-called brain drain is actually good for India in the long run. Don't disincentivise it.

(Sinha link via email from Varun Singh.)

Update: Reuben Abraham has an excellent analysis here.

Update 2 (July 1): Gaurav Sabnis writes that there is a better option to this proposal: Stop subsidising higher education.
amit varma, 1:01 AM| write to me | permalink | homepage

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