NEW YORK: India’s Prime Minister Narendra Modi can give the best ‘gift’ ever to the NRIs in the United States when he arrives sometime in June for an official state visit to further bilateral ties, at the invitation of President Barack Obama: finalize the totalization pact, which would mean Indian nationals who work in the US for less than 10 years and then return home will be able to get social security taxes back. Also Read - After PM Modi's Brigade Rally, BKU Leader Rakesh Tikait To Speak with Bengal Farmers on March 13
In his three previous visits to the US, Modi has reached out to the Indian diaspora like no other Indian prime minister ever has, in the less than two years since he assumed office. From his admirable speech at the Madison Square Garden in New York to his sojourn to Silicon Valley, and recently during his visit to Washington, DC, for the Nuclear Security Summit, he’s made time to reach out and greet the NRIs.
Modi has also endeared himself to the diaspora by making announcements on important changes, improvements and initiatives to help the NRIs, especially to ease passport and visa issues when traveling to India; ensuring that the second and third generation diaspora do not find it cumbersome to travel there, reduced paperwork, visa stamp issues. California now has a direct, non-stop Air India flight to India.
The one major bilateral issue, however, that would be of most use and almost a blessing to the NRIs – given the long wait for Green Cards now – would be the totalization pact. The UPA government in its two terms failed to resolve the issue despite plenty of rhetoric, with several meetings between officials of the two countries, be it in New Delhi or Washington, taking it up, with little headway. In all, four rounds of talks were held over 10 years with no results.
After talks stalled for almost five years, the issue was taken up during the trade policy forum meeting in November 2014, co-chaired by commerce and industry minister Nirmala Sitharaman and her US counterpart Michael Froman. Then, in May 2015, a US government delegation met Indian embassy officials in Washington, to discuss the issue. It came up for talks again when union minister for finance, corporate affairs, information and broadcasting Arun Jaitley met with Froman, in Washington, last week.
There seemed to be some headway and hiccups too in the recent talks: the US tried to negotiate giving back social security taxes to Indians who work for at least 4 years. India rejected that, saying it should be for any amount of time. The US countered India by saying that India’s social security system was not compatible with that of their own, thus, disqualifying a pact, which would benefit citizens of both countries.
The underlying argument made by the US was that India’s social security system administered by the Employees’ Provident Fund Organization, and other umbrella initiatives, including the Atal Pension Yojana, the Pradhan Mantri Jeevan Jyoti Bima Yojana and the Pradhan Mantri Suraksha Bima Yojana, to cover informal sector workers, do not cover at least 50% of the Indian working population.
India later denied those allegations, saying that those social security measures does indeed cover more than 50% of the working population.
The US has a totalization pact with 24 countries; India with 14. If India-US conclude a pact, it would benefit at least 500,000 Indian nationals, and counting. According to the Indian government, Indian professionals contribute $1 billion annually to the US social security system. In all, it’s estimated that Indian professionals have contributed a total of $25 billion in social security taxes in the past decade.
It’s estimated that Indian workers contribute 15% of their salary to the social security system, the largest social welfare program in the US, accounting for 37% of the government expenditure and 7% of GDP.
The ramifications of a totalization pact would be huge for India. NRIs who have worked for many years in the US with no sight of a green card would have an option to go back, think hard about it, with a hefty amount of money to restart their life.
The US on its part would find it a big drain on their revenue. As I’ve written earlier, it would also force the US to reform the immigration system, induce skilled professionals to settle down permanently in the country, perhaps expedite Green Cards.
Modi, on his state visit, is also likely to flag off a non-stop direct flight from Washington, DC to India, which had been announced earlier but is probably put on hold, to coincide with his visit.
This story was originally published on The American Bazaar.