Leveraging the diaspora


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DURING much of the 20th century, but especially since the 1950s, international migration from Punjab has been substantial. The great migrations from India in the 19th century had drawn only modestly from Punjab. The indentured labour came from poorer groups from central, eastern and southern India, not from Punjab. By contrast in the 20th century, Punjab has been one of the leading states of emigration from India (along with Kerala and Gujarat).

Several factors contributed to this change. One, the rapid expansion of canal irrigation in the late 19th century in western Punjab raised incomes, allowing households to meet the threshold expenses for free passage. Second, post-1857 Punjab emerged as the principal area of recruitment in the British Indian army. Overseas postings led to some of them settling abroad after retirement. Third, labour recruitment, especially for craftsman in East Africa during the railways construction boom, created another conduit of overseas migration (especially Ramgarhia Sikhs). However, the biggest change came in the 1950s with the growing demand for labour in England. Subsequently, from the 1970s onwards, large numbers have migrated to North America, especially Canada.1

Although much has been written on migration from Punjab, most of the attention has focused on the migrants, while much less is known about the political and especially economic impact on Punjab itself. Given the sizable numbers of international migrants one might expect a priori the economic consequences to be considerable. But this does not appear to have been the case. A striking feature of international migration from Punjab is the absence of diaspora investment in Punjab in industry and services. This paradox is more striking because Punjab has one of the highest per capita incomes among Indian states, a relatively skilled pool of labour and low labour strife. It scores highest among Indian states in the quality of its infrastructure and is ranked only after Kerala on the human development index. Is this assessment correct and, if so, what explains it?


It could be argued that there is no paradox. International migration has contributed to rural development and the green revolution in Punjab (especially in the Jalandhar Doab). Kessinger’s detailed ethnographic account of one village (Vilayatpur), shows the many channels through which this operated. The migration (especially of young men) reduced the pressure to sub-divide the land in smaller and smaller plots. And remittances not only helped investments in the land but also to acquire more land.2

This view is corroborated by Helwig’s study of the village Jandiali. He further argues that the remittances were ‘responsible for a large increase in yields. Money enabled local residents to live better, invest in machinery, obtain and use new varieties of seed and gain new ideas about farming from abroad. Also with the outflow of people, the pressure on the land decreased so that there was more production for less people.’3

Remittances generally improve consumption and living standards, help enterprises by providing access to working capital and easing credit constraints (for instance the purchase of farm equipment), and in so far as they are channeled through the financial system, they contribute to financial deepening. However, as Kerala’s experience over the last several decades vividly demonstrates, remittances are not helpful for long-term investment and growth in the absence of conducive policies and institutions.

A different effect stems from the claim that remittances have significantly contributed to community development. The village of Kharodi, which has received over a crore of rupees in investments (primarily from Canadian NRIs) that have led to improvements in the quality of roads, water and sewage systems, and a resulting decline in the incidence of various water-borne diseases, is frequently cited as an example of the beneficial effects of remittances. Remittances have also contributed to scheduled caste mobilization in recent years. Adi-dharm households buoyed by income from family members living abroad that has reduced their dependence on Jat patronage, have increasingly challenged the hegemony of Jat Sikhs.4


There is also a long history of the Punjab diaspora’s support for educational institutions, a process that continues today.5 Furthermore, it has been argued that the diaspora realized the value of education in western countries and transmitted these values back, thereby increasing the demand for education by reshaping values and expectations of residents in Punjab.6 The transmission of ideas was also furthered by return immigration, especially in agriculture – be it Sardar Pratap Singh Kairon’s determination after returning to make Punjab a Kansas or an Iowa-clone in farming, or the role of many agricultural scientists in Punjab Agriculture University.7

Although there are specific examples that support each of these claims, there is little systematic evidence on the overall effects on Punjab. For instance, some have argued that financial remittances played only a modest effect in the success of the green revolution – they were the icing on the cake, not the cake itself.8 Indeed, since a considerable part of remittances appear to have been deployed to buy land, the resulting rise in land asset prices further distorted Punjab’s political economy, a point we shall examine later.


Moreover, remittances are a form of rent and establish a culture of migration. Often they serve little more than to provide the large sums (estimates range from Rs 8-10 lakh in recent years) needed to finance further emigration. And it is unclear why, if the transmission of ideas about education are true, this has not extended to gender equality? While in India, between 1991 and 2001 the gender ratio rose from 927 to 933, in Punjab it fell from a worrying 882 in 1991 to an even lower 874 in 2001 (of the ten districts in India noted for the lowest sex ratio in 0-6 age group, seven are in Punjab).

Several explanations could be advanced for the meagre investments by overseas Punjabis into the state.9 First, for long India’s economic policies discouraged FDI in general, whatever the source, and the few intrepid NRIs that did try (for example, Swaraj Paul in the 1980s) were blocked by domestic Indian business houses. Moreover the Indian state’s attitude to NRIs was at best a benign neglect if not mild hostility. Even after the 1991 reforms, the NRI share of FDI into India has been no more than seven per cent (in stark contrast to China where its share exceeded two-thirds of much greater inflows), so Punjab’s case may not be exceptional.


A second factor is the nature of migration and the diaspora from Punjab. Unlike post-independence migration from other parts of India, that from Punjab has been largely rural. Consequently the migrants have been relatively low-skilled. Thus they did not enjoy incomes to have an investable surplus.This has also affected the types of investments made, such as for stadiums and sports meets and upkeep and improvement of gurdwaras, which have more to do with their effects on the investor’s standing in the community than their financial payoffs.

Furthermore a large part of the diaspora from Punjab is engaged in activities that do not bring skills or advantages to Punjab. Many of them are engaged in non-tradeable entrepreneurial activities, especially in retail or as professionals. For instance, a large number of petrol pumps in Northeast US are owned by Sikhs. But this trade does not equip them with any advantage in opening businesses in India. In the UK, the 2001 Census found that Sikhs account for 0.7 per cent (327,000) of the country’s population and tend to have lower educational qualifications and a blue-collar occupational bias. Many of those with higher incomes have migrated from East Africa and have little connection with Punjab. Increasingly the majority of Sikhs in the UK are second generation, and they are doing much better especially with regard to educational attainments.10 However, by the time the second generation (especially in the UK) came of age – and these were more educated and with higher incomes – events in Punjab had alienated a large part of the Sikh diaspora. While Sikhs in Canada, and particularly the US, have fared better, many amongst the latter are from urban India outside of Punjab and their investments are more likely to be directed that way as well.


A third factor was the Punjab crisis, which effectively drove away investment for more than two decades. During these crisis years the diaspora played an inimical role fanning the conflict with its material and personnel support for militancy, claiming as its main victims the people of Punjab not the diaspora safely ensconced thousands of miles away.

In the new millennium politics as usual has re-emerged in Punjab. Politics in Punjab today is not really that different from the rest of India. Fortunately, militancy has died out and although the scars of the lack of justice in the 1984 riots still run deep, the symbolism of having a Sikh prime minister, and for the first time in India’s history a Sikh head of the army has helped restore some confidence in the Indian state. In the 2004 Punjab elections, non-resident Indians (NRIs) from the UK and US campaigned in Punjab, providing material and political support to different candidates.


It was widely expected that in the post-reform era the past economic performance of Punjab would continue unabated. The state’s economy had been growing at a faster pace than the national economy until the late 1970s and was moving ahead almost at the same pace during the 1980s despite licensing and location policies of the central government which discouraged investment in border states, with Punjab being a major victim. All this changed after 1991 and market reforms would appear to favour the very feature that Punjabis are so proud of – their enterprise and work ethic. Yet, despite Punjab’s potential strengths in manufacturing and agriculture exports, outcomes have been below expectations.

During the 1990s, Punjab’s annual growth rate was lower than that of the national economy. It could be argued that integration with the global economy requires excellent infrastructure and interior provinces face a natural handicap in this regard, especially given India’s poor infrastructure. Nonetheless, this should not be exaggerated as exemplified by the investment and export boom in the regions adjoining the National Capital Region (Gurgaon in Haryana and Noida in UP).11

The principal impediment to the continued lack of investment by the diaspora appears to be the state’s political economy. An important political effect of the green revolution was a gradual shift of power to the rural elite, in particular Jat Sikhs, who historically had also been the main emigrant community from Punjab. The dominance of Jat Sikh farmers has vitiated Punjab’s quest to build on its earlier success. The very reasons for Punjab’s success – massive government spending on irrigation and agricultural subsidies (price supports, fertilizer) – have become an albatross around the state’s neck. At the same time, the critical engine of growth – agriculture – has stalled.


More importantly, there is a sense that while other states (especially in the South and West) have been moving ahead, Punjab has been lagging behind. Punjab’s emergence as a major producer of rice may have extracted considerable resource transfers from the central government, but it has locked the economy into an ecologically harmful, low value-added commodity production. As the water table declines precipitously, a result of free power to farmers promised by successive governments, the state becomes less attractive to modern sectors that require assured supplies of water and power.

It is not as if governments in Punjab have not tried to engage the diaspora. As with the central government, substantial effort and resources have been deployed. There is a Department of NRI Affairs. The NRI Sabha was founded in 1996 as a joint Punjab government-civil society endeavour to look after the interests and welfare of the Non-Resident Punjabis and strengthen their emotional and ethnic bonds with Punjab. It has formed a Punjab NRI Committee for Development (PUNRICD) for the purpose of providing matching (1:1) grants to NRI-sponsored projects.

In 2006, the Punjab government decided to double the number of seats in medical institutions available under the NRI quota. While these will reduce the number available to residents, the substantially higher fees provide much needed resources to financially strapped universities. The Punjab government has also taken steps to address the many grievances of NRIs, especially on property disputes – from amending the East Punjab Rent Restriction Act 1949 and Punjab Security of Land Tenures Act to trying to set up Special Courts for NRIs, and the appointment of NRI nambardars in villages where more than twenty families have migrated to take special care of the properties of NRIs in their absence.12 It has provided land in Jalandhar to the NRI Sabha for construction of a NRI Bhawan. And to attract investment in Punjab it has decided to institute single window clearance to make it easier to set up a new industry.


Nonetheless, more of the effort has focused on emotion, sentiment and symbolism and less on the prosaic fundamentals that drive investments. Organizing NRI melas is no substitute for sound economic policies that signal confidence to investors. While Punjab is not unusual in the degree of reckless populism marking most states, its political economy has made it more difficult to switch gears. For instance, with elections approaching in 2007, the state government has decided to up the populist ante by promising free power (up to 200 units) for all scheduled caste consumers (who represent nearly a fourth of the electorate), irrespective of income. In 2002-3, Punjab spent Rs 900 crore on power purchases to make up for its shortfalls, a figure that climbed to Rs 2,400 crore in 2004-05. The power of the agrarian lobby means that promises of adequate power at competitive rates are simply not credible.


Punjab can take several steps to leverage its diaspora to a significantly greater degree than is currently the case. It can take advantage of its own strengths and its diaspora in agriculture to leapfrog into biotech. The growth of contract farming in Punjab not only offers an opportunity to switch to high value-added agriculture but also stronger links with its diaspora, many of whom are engaged in food distribution trade in the UK and North America. A radical overhaul of its higher education, especially encouraging new reputable private universities and greater autonomy to existing state universities, would allow Punjab to steal a march over other states. In addition to creating the necessary human capital that would attract investment, this could in addition create critical links with the second and third generation members of the diaspora,and become a service sector industry in its own right as well. An imaginative approach could be for the Punjab government to link with Canada and the UK as partner countries, given the large size of its diaspora in the two countries.

Ironically, an emerging agricultural crisis in Punjab may offer the best hope for change. Punjab shares with the rest of India a political economy where change occurs only when there is a crisis – and in agriculture at least the day of reckoning may well be approaching. Leveraging its diaspora is not a magic bullet that will solve all of Punjab’s problems but it sure could alleviate some of them.



1. Although much is made of the migration from Punjab to North America in the first two decades of the twentieth century, this total was in the range of 10,000 and did not resume until after WW-II. Darshan Tatla, The Sikh Diaspora: The Search for Statehood. UCL, London, 1999; Darshan Tatla, ‘The Rural Roots of the Sikh Diaspora’, in Ian Talbot and Shinder Thandi (eds), People on the Move: Punjabi Colonial, and Post-Colonial Migration. Oxford University Press, 2004.

2. Tom Kessenger, Vilayatpur, 1848-1968: Social and Economic Change in a North Indian Village. University of California Press, Berkeley, CA, 1974.

3. Arthur Helwig, Sikhs in England. Oxford University Press, New Delhi, 1986, p. 4.

4. Dipankar Gupta. ‘Whither the Indian Village’, Economic and Political Weekly, 19 February 2005.

5. Margaret Walton-Roberts. ‘Transnational Educational Fundraising in Punjab: Old Practices, New Readings’, Journal of Punjab Studies 12, 2005, 129-152.

6. S. Mehta, Migration, a Spatial Perspective: A Case Study of Bist Doab-Punjab. Rawat Publications, Jaipur, 1990.

7. The process has continued. For instance, the largest seed potato farmer in Punjab has set up an on-farm tissue laboratory established by his son, who returned after completing a masters degree in agricultural science from Cornell. CASI, ‘India’s Second Green Revolution? The Sociopolitical Implications of Corporate-Led Agricultural Growth, Fall 2006. http://www.sas.upenn.edu/casi/publications/DBI/IIT_F2006.pdf

8. Roger Ballard, ‘The Context and Consequences of Migration: Jullundur and Mirpur Compared’, New Community 11(4), 1983. However, even then Ballard argues the economic effects were much greater in Indian Punjab than in Pakistan (Azad Kashmir). See also Mehta (1990), op. cit.

9. See also Shinder Thandi, ‘Some Reflections on the Potential of Diaspora Finance in the Socio-Economic Development of Indian Punjab’, in Ian Talbot and Shinder Thandi (eds), People on The Move, Punjabi Colonial, and Post-Colonial Migration, 2004, op cit.

10. According to 2001 UK Census 56% of the Sikh population, but less than half of Muslims and only 37.5% of Hindus were born in the UK. 48% of second generation Sikhs in the UK have some tertiary education compared with just 17% for the first generation. The corresponding figures for UK Hindus are 31 and 64%. Source: Nabil Khattab, ‘Inequalities and Polarities in Educational Achievement Amongst Britain’s Ethnic Minorities’, paper presented at the 7th conference of the European Sociological Association, Torun, September 2005, Table 4.

11. A slew of recently begun infrastructure projects will greatly increase Punjab’s connectivity. These include the Chandigarh-Morinda rail link, the Halwara International Airport near Ludhiana, the Knowledge City at Mohali and the North-West Railway Freight Corridor between Ludhiana-Delhi-Mumbai and Ludhiana-Delhi-Kolkata.

12. Land related problems are likely to be further alleviated by the advent of dual citizenship.