'Not seeing enough churn in our business elite':  Sanjeev Sanyal on why millionaires are leaving India

Economist and historian Sanjeev Sanyal has said that the issue of millionaires leaving India is not just linked to quality-of-life concerns but also reflects deeper structural problems within the country’s business elite.

Speaking on a podcast with Smita Prakash, Sanyal, a member of the Economic Advisory Council to the Prime Minister (EAC-PM), said, “Quality of life, to some extent yes, I can have some sympathy on air quality and issues like that. But let us also be very, very clear — some part of it is that we are not seeing enough churn in our business elite.”

He explained that when a business elite remains largely unchanged over generations, it tends to lose its drive for innovation and may start seeking protection for its industries rather than competing globally. “After a few generations they will lose the fire for innovation and they will ask for protection of their industries in India while they set up family offices in Dubai,” he said, adding that this behaviour is not unique to India and can be observed in other countries as well.

Sanyal stressed that legacy businesses often become stagnant if new talent and ideas are not allowed to emerge, which can hold back broader economic growth.

Highlighting India’s vibrant startup ecosystem, Sanyal contrasted young entrepreneurs with established business families. “In Bangalore, which has all kinds of problems, there are startups doing amazing things. Those kids are sitting in somebody’s backyard or garage and doing new things,” he said, suggesting that innovation and risk-taking are still alive among younger generations, even if older elites are hesitant to embrace change.

He also criticised parts of the business elite for failing to invest adequately in research and development. “Let us not excuse our business elite who are not investing in R&D. They are using their occasional CSR activities as some sort of a substitute for the hard work of being knee-deep in the mud of their factory, doing shop floor work,” he said, highlighting a gap between appearance and real engagement in productive work.

According to Sanyal, the solution lies in keeping India’s economic system open to disruption and failure. “The key solution to this is to keep our system open enough that it allows for continuous churn,” he said, emphasizing that renewal is necessary for long-term economic vitality.

He said he is a strong supporter of allowing insolvency and bankruptcy to play their role in the economy. “You have to allow continuous insolvency and bankruptcy. You have to be completely okay with large companies dying continuously,” he said, noting that fear of failure often prevents businesses from taking necessary risks.

Referring to the banking crisis of 2017, Sanyal said India’s corporate sector recovered because the government allowed major failures. “We absolutely bankrupted some of India’s largest companies. Did it make our corporate sector weaker? No. It came back much stronger,” he said, stressing the benefits of allowing companies to fail rather than protecting them at all costs.

Citing the aviation sector, Sanyal added, “We allowed Jet Airways to die out. That allowed some other airlines to grow.” He said companies that fail to meet infrastructure and regulatory standards should not be shielded from failure, as this would hinder overall competition and innovation in the economy.

Sanyal’s comments come amid ongoing debates over the migration of wealthy Indians abroad, raising questions about the role of India’s business elite in driving domestic growth and innovation.