Practicing Medicine in India – Podcast #217

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Practicing Medicine in India - Podcast #217


We have done episodes about what it is like to practice medicine in England, Australia, and Venezuela. Next up is India. With Dr. Maheswari Raja, a family physician, we discuss what it is like to live in, attend medical school, train, and practice medicine in India. It is a fascinating country with a lot of different people, opinions, and politics as you move from one state to another, throughout the country. But it’s great to get an introduction to it and learn a little bit more about it. We discuss the process for becoming a doctor there, the Indian medical system and differences between care in large cities and rural villages. Of course, we talk about income, how they pay for college and medical school, how large their student loan burden is, and how they save for retirement. Inflation in India has ranged from 4% to 13% over the last 30 years. Inflation in the US recently went up to 5%. We discuss what lessons we can learn from Indians about how to live in an environment with significant inflation. Indian banks, tax brackets, sending money to India, and the importance of gold in India are all addressed in this interview. We hope you find it as interesting as we did.

Dr. Raja is a family physician, 15 years out of residency, practicing in Dallas, TX. She attended medical school in India and currently has many family and friends who still practice medicine there. Much like the UK and Australia, you can go into medical school right out of high school. So in 12th grade you take your entrance exams. It’s very competitive and challenging to get into the government medical colleges, which is the preferred. It is four and a half years of med school and one year of a compulsory internship, called a CRRI, Compulsory Residential Rotating Internship, where they do rotations through surgery, medicine, pediatrics, psychiatry, and orthopedics.

Once out of that five and a half years, you get the degree M.B.B.S, which is Bachelor of Medicine, Bachelor of Surgery. You can register and start practicing as a general practitioner.

I asked how often people do that versus do some kind of a post-graduate residency or fellowship training of some kind? She said back in her parents’ time there were doctors who worked rural, with just the M.B.B.S, but not anymore. Now almost everyone specializes or super specializes.

Government medical colleges are preferred. The tuition is very minimal. Her parents paid 10,000 rupees, which is less than, maybe $100 or $135, something like that in today’s money, per year. So, the cost is very, very minimal. But there are private medical colleges where you can pay a capitation fee. It’s about 16 times higher. There are a lot of private medical colleges that one can also choose to go to if they cannot make it with the government colleges.

Compared to the US, even 16 times that cost is a heck of a deal. There is a little bit of “looking down” on private medical school students. The person who went to the government medical colleges is seen as more brainy. When someone scores very poorly on their exams and then they go into private medical colleges, there is this sense of “looking down”, but then once they’re in practice, no one knows the difference.

Dr.Raja was married to someone living in the US so she applied to do residency here. I asked what percentage of her class tried to leave India to practice. She said maybe 20%.

73 rupees to a dollar is the current exchange rate. As an intern, she was paid $2000 rupees and now they make 20K rupees. Basically paid nothing that last year of med school essentially.

When they’re doing their post-graduate, they do get a stipend and it’s probably about 30,000 rupees. That is just over $400/month. That seems hard to live on, even in India. But she assured me that the cost is not like in the US, so they can do that. Once they’re out of residency, as a new graduate, depending on the specialty, they’re probably going to make about 100,000 rupees a month minimum. We are talking about $1,500-$2,000 a month is what attendings are making.

Most of them would do private practice too where they make a lot more, and then once they become popular and their name is known out, then the sky’s the limit. There are people who make like 2 million to 3 million rupees a month.

Doctors are considered rich in India. Compared to the common Indian, they are making a lot more.

The Indian medical system has a free public healthcare system available to any Indian citizen. That is broken down into rural primary health centers and community health centers that are a little bit bigger. Then the district hospitals, which are the urban hospitals, then medical colleges are usually attached to the government hospitals, the bigger ones for training.

Middle-class and people who can pay will go on to private doctors. They have outpatient clinics. They have small 30 to 50 bed hospitals. She could own a hospital. The larger corporate hospitals are also in the big cities. Medical tourism is very popular these days because cost compared to other developed countries is much less.

There are a lot of different languages spoken in the various parts of India. We discussed how much trouble that causes the practitioners when they come into these secondary and tertiary hospitals. She said,

There is a pretty big difference between the quality of care in larger cities versus rural villages. For example, getting a knee replacement or getting radiotherapy or getting more sophisticated robotic surgeries and things like that, all of that is going to be available only in the big cities. It’s not going to filter down to the rural places.

What lessons are there for the US? What should we adopt from the Indian system that might make our system better?

Better to have a two-tier system than have some people that aren’t eligible for any system.

There are a lot of doctors of Indian descent in the US. We discussed why that is.

If they work for the government, they have pension plans. They are frugal, they save and there are real estate investments, mostly agricultural land. Real estate tends to be one of the things that they more commonly do. When investing in stocks, they tend to invest in stocks that are in India.

Now inflation in India has been significantly higher over the last few decades than here. It ranges anywhere from 4% to 13%. Our inflation just went up. Most recently it was reported out as about 5%. But what lessons can we learn from Indians about how to live in an environment with significant inflation?

People have adjusted to it. Their salaries are rising faster than they otherwise would and their expenses are rising faster than they otherwise would. But it hasn’t been a catastrophe, it doesn’t sound like it.

We can’t have a discussion on a financial podcast about India without talking about gold. What is the deal with gold among Indians?

Not to mention it typically keeps up with inflation, which probably helps in that respect.

One of the things I’ve found interesting over the years, and I’ve gotten questions about from docs with family in India or docs in India, or that split their time between the two countries—they’re always asking me whether they should put money in Indian banks, convert it to rupees and put it in there.

Because Indian banks have paid interest rates of 3% to 10%. Right now, I go down to the bank down the street, I can make 0.05%, or I can find a high-yield savings account that right now is paying 0.6%. I can just put that money in India and make 3%-7%. Is it a good idea for a US investor to put money in an Indian bank?

She didn’t think so.

She thought we would, in a constantly weakening rupee, lose the extra interest we are making. But she does keep some money in rupees because she visits every year and wanted some money over there just for convenience purposes.

The Indian tax brackets range from 5% to 30%. Most of India does not pay income tax. They don’t even fall into the tax brackets. There are very few people, about 2% actually are filing income tax. The government does not want to be unpopular by increasing individual tax. So, they don’t do that.

But they make up in almost everything else, all the indirect taxes, commodities, goods, real estate, entertainment, and everything else is taxed so that they make up. A lot of the money is coming from sales taxes rather than income taxes.

In the US, the actual federal income tax, I think there is something like 47% that don’t pay any money into it. They think they do, but they get it all back at the end of the year. If you include the payroll taxes like social security tax, it’s a far higher percentage. Almost everyone that is working is paying some sort of taxes in the US. But only 2% in India. It’s a very different system.

I asked about tax fraud. If she got the sense that there is a lot of people that should be paying taxes and aren’t? That they’re cheating or that it’s corrupt?

Another thing that often happens, particularly first-generation docs, they move here and now they’re making the big bucks. They’re making $200,000 – $300,000 – $400,000 a year, and they have all this family in India that’s living off $400 a month. They tend to send a lot of money back. What should US docs with family in India know about sending money or moving assets between the two countries back and forth in each direction?

Know the limits and stay under those limits when you send money.

Let’s say someone wanted to go practice in India either short-term or long-term. How hard would it be to go there and practice?

I think it was interesting to learn a little bit more about living in India and coming here from India. It’s a fascinating country. An eighth or sixth of the people on the planet live in India. So obviously, there’s a lot of different people, opinions, and politics as you move from one state to another, throughout the country. But it’s great to get an introduction to it and learn a little bit more about it. You can read more from Dr. Raja in her guest post on Money and Arranged Marriage and via her instagram account.

This episode of The White Coat Investor is sponsored by Biohaven Pharmaceuticals. Biohaven is a commercial-stage biopharmaceutical company with innovative therapies designed to improve the lives of patients with debilitating neurological and neuropsychiatric diseases, including rare disorders. Biohaven offers a broad pipeline of late-stage product candidates across three distinct mechanistic platforms, including developing therapies for patients with Amyotrophic Lateral Sclerosis (ALS), Alzheimer’s, and obsessive compulsive disorder (OCD). The FDA also recently gave Biohaven’s Nurtec® ODT (rimegepant) its second indication. To discover more about Nurtec ODT and Biohaven’s neuroinnovative portfolio of treatments in development, visit www.biohavenpharma.com.

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This doctor couple went from -$500K to millionaire status in 9 years with an income ranging from $200-$500K. What makes this episode different is that one of them became disabled during that time. They had to sell the practice and collect disability insurance payments. There is a reason disability insurance is the first step in our Bootcamp. Here is what you need to know about disability insurance.

That is awfully true, I say as someone who just picked up my boat from the shop. A boat stands for bring out another thousand and that certainly is true. It is a hole in the water that you throw money into. I highly recommend against boating if you are trying to build wealth, that was definitely not a great hobby financially speaking. Lots of fun, but not a great hobby from a financial perspective.

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Intro:
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We’ve been helping doctors and other high-income professionals stop doing dumb things with their money since 2011. Here’s your host, Dr. Jim Dahle.

Dr. Jim Dahle:
This is White Coat Investor podcast number 217 – Practicing Medicine in India.

Dr. Jim Dahle:
Well, it is June 18th today. We’re recording this to run on July 1st and there’s a few things you should know. We’re coming up on the end of the medical year. We’re getting to the end here. We’re going to have new interns, new residents, new attendings. In a couple of weeks many of you are finishing up your training. You’re getting into that most important year of your financial life. Now’s the time to take the bull by the horns. Take advantage of your change in status to reevaluate your whole financial life and really get a handle on things.

Dr. Jim Dahle:
Over the next few weeks, we’re going to have episodes dedicated to what you need to do as a new resident, what you need to do as a new attending. And I hope you take the time to listen to those episodes.

Dr. Jim Dahle:

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Dr. Jim Dahle:
Our quote of the day today comes from Henry David Thoreau, who said “The man is the richest whose pleasures are the cheapest”.

Dr. Jim Dahle:
And boy, that is awfully true. I say as somebody who just picked up my boat from the shop. A boat stands for bring out another thousand and that certainly is true. It is a hole in the water that you throw money into. I highly recommend against boating if you are trying to build wealth, that was definitely not a great hobby financially speaking. Lots of fun, but not a great hobby from a financial perspective.

Dr. Jim Dahle:
Thanks for what you do. Life is hard and your profession is a difficult one to do for long periods of time. That’s why rates of burnout are so high among doctors and dentists and pharmacists and attorneys and other high-paid professionals, because it’s hard work. So, thank you for that. We appreciate it.

Dr. Jim Dahle:
One way we are going to show our appreciation is for the next 12 days from now through July 12th, we’re going to give you 10% off on all of our online courses. That includes Fire Your Financial Advisor, which includes the version of Fire Your Financial Advisor that you can use your CME funds to pay for. That’s called Financial Wellness and Burnout Prevention for Medical Professionals. It’s the entire Fire Your Financial Advisor course plus about eight hours of CME qualifying wellness content.

Dr. Jim Dahle:
Also, if you’ve already got your written financial plan in place and don’t necessarily need Fire Your Financial Advisor, we recommend Continuing Financial Education 2021. All of these are 10% for the next 12 days through July 12th.

Dr. Jim Dahle:
And if you buy them, we will not only give you that discount, but we will send you one of these sweet WCI t-shirts, a WCI t-shirt of your choice, whichever one you want. And then you can also be part of the club, and show your support for the white coat investor.

Dr. Jim Dahle:
So, the code you need for that is WCI JULY 10. It stands for 10% off. WCI JULY 10 gets you 10% off, plus a free t-shirt and you get all the same usual guarantees and warranties. If you only watch a little bit of it and you ask for your money back, it’s 100% no questions asked money back guarantee. So, there’s no risk to check it out.

Dr. Jim Dahle:
Go to whitecoatinvestor.teachable.com to see all those courses and check them out. You don’t have to take them today. You just got to buy them today in order to get that discount and your t-shirt.

Dr. Jim Dahle:
We got a special guest today I’m looking forward to. You may have noticed over the years we’ve occasionally had docs from other countries that have talked about practicing in other countries. And this interview today is along those same lines. So, let’s get Dr. Raja on the line here, and we will talk about practicing in India. Dr. Raja, welcome to the White Coat Investor podcast.

Dr. Raja:
I’m happy to be here.

Dr. Jim Dahle:
I understand you have a friend that you promised you were going to be on the podcast too, not that long ago. What’s she going to think about hearing your voice on here?

Dr. Raja:
I don’t know. I haven’t told her I’m recording today on a completely unrelated topic, but I’m manifesting.

Dr. Jim Dahle:
All right. So, this should be a lot of fun. Well, today we’re going to talk about practicing in India. We’ve had episodes about Venezuela and Australia, and we’re probably going to have some about some other countries. We had somebody on from England. And it’s really easy I think, in a number of countries where people speak English. India and England and Scotland and New Zealand and Australia. This might be hard if we start trying to do it for docs in Mongolia or places like that, but so far so good. So, your background. Why don’t you tell us a little bit about your background and how you know anything about what practicing in India is like?

Dr. Raja:
Okay. So, I’m a family physician and I practice in the Dallas area. I have been out of residency for about 15 years now. I did med school in India. I have family and friends who still practice there. So even though I was born in India, I was raised in Africa. I grew up in Nigeria, part of my life, and then went back to India about middle school. I stayed there through high school and med school, and then came here about 21 years ago and did my residency here at Wayne State University.

Dr. Jim Dahle:
And you have been practicing here in the U.S. ever since?

Dr. Raja:
Yes. I’ve never practiced in India, but I know about practice in India.

Dr. Jim Dahle:
Yeah. So, we’re going to talk about that as much as we can today and I’m sure someone will go, “Hey, I practiced in India. You should put me on the podcast”, but that’s okay. We’ll try to keep our information factual. And I think this is really interesting for a lot of docs because they’ve never seen any other system. They don’t know anything about it. But tell us a little bit about the process of becoming a doctor in India.

Dr. Raja:
I think much like the UK and Australia, you can go into med school right out of high school. So, it’s 12th grade, take your exams. There is usually an entrance exam that is set up. It’s very competitive. It’s hard to get into the government medical colleges, which is the preferred. And there used to be like, when I did it, it was a combination of your 12th grade marks and then they would also look at your entrance exam marks. I think now it’s all entrance exam.

Dr. Raja:
But then you get into med school and it’s four and a half years of med school and one year of a compulsory internship, it’s called a CRRI. Compulsory Residential Rotating Internship is what it’s called, where they do rotations through surgery, medicine, pediatrics, psychiatry, orthopedics. We do all the general.

Dr. Raja:
And then once out of that five and a half years, you get the degree M.B.B.S, which is Bachelor of Medicine, Bachelor of Surgery. And you can register and start practicing as a general practitioner.

Dr. Jim Dahle:
And how often do people do that versus do some kind of a post-graduate residency or fellowship training of some kind?

Dr. Raja:
They don’t do it very much these days. Back in probably my parents’ time, there were doctors who worked rural, with just the M.B.B.S, but not anymore. Now almost everyone specializes or super specializes.

Dr. Jim Dahle:
Okay. So, what’s it cost? What’s tuition?

Dr. Raja:
So, I said, government medical colleges are preferred. The tuition is very minimal. I don’t remember. I think my parents paid maybe 10,000 rupees, which is less than, maybe $100 or $135, something like that in today’s money, per year. So, the cost is very, very minimal. And then of course, the board and room and stuff like that, books.

Dr. Raja:
But there are private medical colleges where you can pay a capitation fee. It’s much, much higher. It’s about 16 times higher is what Google tells me. There’s a lot of private medical colleges that one can also choose to go to if they cannot make it with the metric cut.

Dr. Jim Dahle:
Still even 16 times that cost is a heck of a deal.

Dr. Raja:
Yes, compared to the US, yes.

Dr. Jim Dahle:
We got people paying $50,000 to $100,000 a year, just in tuition, in the US to go to medical school. So, if you go to those private medical colleges, do people look down on you or is that frowned upon? Do they look at you and go, “Ah, you couldn’t get into the government college?”

Dr. Raja:
There’s a little bit of that, yes. The person who went to the government medical colleges is more brainy. When someone scores very poorly on their exams and then they go into private medical colleges, they’re not appreciated as much, but then once they’re in practice, no one knows.

Dr. Jim Dahle:
No one knows the difference, huh? You came out of medical school and you didn’t apply or didn’t go to any sort of residency in India. Instead, you decided you’re going to apply to residencies in the US. Why did you do that? How hard was that? What percentage of your class decided to do that? Tell us about that process.

Dr. Raja:
There’s probably a lot like me, but I didn’t choose to do that on purpose. I was married to someone who was living here at the time. So, I knew that I was going to do a post-graduation no matter what, but wherever I lived, I just happened to be in the US so it was, “Let’s do the USMLE and get into residency here”.

Dr. Jim Dahle:
What percentage of your class tried to go to the US to practice or tried to go to Great Britain to practice or tried to go to Australia to practice versus stay in India?

Dr. Raja:
Not a very huge percentage. Most of them are staying back in India. I want to say maybe like 20%.

Dr. Jim Dahle:
Okay. But is there like a huge draw to people going “I want to go to the US and make the big bucks” or something like that? Or most people are perfectly content to make physician wages in India?

Dr. Raja:
There’s always the draw of the Western medicine, the cutting edge and learning, and the books are all from US authors or UK authors. So, I think we always have that. And so, people are drawn to it either to go train at least, and then go back to India. But to live in the US and practice in the US or in the UK or Australia, there’s a small percentage, but not everyone. It has been made so competitive to get into immigration and everything is hard. So, people don’t opt for it as much as they used to.

Dr. Jim Dahle:
Now what kind of money do doctors in India earn, both during training and after training? What kind of salaries are they paid as residents, and then as attendings?

Dr. Raja:
As an intern, they’re probably paid about… I was paid about 2,000 rupees. Now I think it’s like 20,000 or something like that.

Dr. Jim Dahle:
73 rupees to a dollar is the current exchange rate.

Dr. Raja:
Yes.

Dr. Jim Dahle:
So, that’s nothing. You were paid basically nothing that last year of med school essentially.

Dr. Raja:
Yes.

Dr. Jim Dahle:
Okay. And then how about after that year? What do people get paid?

Dr. Raja:
When they’re doing their post-graduation, they do get a stipend and it’s probably about 30,000.

Dr. Jim Dahle:
$30,000 or 30,000 rupees?

Dr. Raja:
30,000 rupees.

Dr. Jim Dahle:
Okay. Wow. Remember, divide that by 73. So, what does that work out to? I’d have to pull out a calculator. I’m not very good with this particular exchange rate.

Dr. Raja:
It’s about, let’s say 70,000 rupees is like $1,000.

Dr. Jim Dahle:
I get $411. That’s your salary as a resident. Huh? That seems hard to live on, even in India.

Dr. Raja:
In India you can live on however much there.

Dr. Jim Dahle:
You can live on $411, huh?

Dr. Raja:
Yes. The cost is not like in the US, so they can do that. And then once they’re out of residency as a new graduate, depending on the specialty, they’re probably going to make about 100,000 rupees a month minimum.

Dr. Jim Dahle:
So, it was 30,000 rupees a month. So, $410 a month. And then you were talking $1,500, $2,000 a month is what attendings are making.

Dr. Raja:
Yes, attendings initially. Most of them would do private practice. And when we get into the healthcare system, I’ll talk a little bit more about that, but they make a lot more and then once they become popular and their name is known out, then the sky’s the limit. There are people who make like 2 million to 3 million a month rupees.

Dr. Jim Dahle:
Tell us a little bit about the Indian medical system. Let’s talk about what are the differences between it and the US medical system? What are the advantages and disadvantages, the pros and cons? Tell us about it because the vast majority of the people listening to this podcast have never even visited India much less practiced there. So, tell us about the system a little.

Dr. Raja:
The system again, is there’s the free public healthcare that’s available to any Indian citizen. And that’s broken down into like the rural primary health centers. And then there’ll be the community health centers that are a little bit bigger. And then the district hospitals, which are the urban hospitals, which medical colleges are usually attached to the government hospitals, the bigger ones for training and stuff.

Dr. Raja:
So, the primary health centers are usually maybe 3,000 to 5,000 serving as far as the public health staff. And then the whole population, probably about 20,000 to 30,000, the rural villages. And there’ll be staff for just outpatient primary care. And then if there’s like deliveries and pediatrics and stuff like that, surgeries, that goes on to the community health centers and then the larger centers for more referral basis, patients. This is all free. Anyone can go. Mostly the poor and the rural people go.

Dr. Raja:
Middle-class and people who can pay will go on to private doctors and there will be the same set up. They have outpatient clinics. They have small 30 to 50 bed hospitals. I could own a hospital. If I open up a hospital, I could do that very easily there. And then the larger corporate hospitals also in the big cities. Medical tourism is very popular these days because cost is compared to other developed countries, much less.

Dr. Jim Dahle:
What about the language barrier? Now, a lot of people in the outline rural areas don’t necessarily speak English. I understand there’s a lot of different languages spoken in the various parts of India. How much trouble does that cause the practitioners when they come into these secondary and tertiary hospitals? Is translation a big deal or not really?

Dr. Raja:
Translation is nothing at all. Every state will function by itself, it’s not centralized. And if I’m going to practice, I’m going to practice in this state that I speak, whatever language I speak. And I speak only my mother tongue and English. So outside of my state, India, it’s hard for me to survive. I have to survive with English.

Dr. Jim Dahle:
What about the difference between the care you get in the larger cities versus the rural villages? Is there a pretty big difference in the quality of care you receive in India?

Dr. Raja:
Yes. There is. Getting a knee replacement or getting radiotherapy or getting more sophisticated robotic surgeries and things like that, all of that is going to be available only in the big cities. It’s not going to filter down to the rural places.

Dr. Jim Dahle:
Now, there are a lot of doctors of Indian descent in the US. In the Upper Midwest, it seems like it’s half the doctors sometimes. Why do you think that is?

Dr. Raja:
I think there are a few reasons. At least this is my opinion, again, I don’t know, but back in the 60s and 70s, I think it was really easy for doctors. There was a need and I think it was very easy for doctors to immigrate and it was better life, better quality of life, better money, exchange rate, things like that, that they came over here. And I think for the second-generation kids, education is emphasized in Indian families a lot. And you have to either be a doctor, engineer, lawyer, or something like that.

Dr. Jim Dahle:
You can do whatever you want as long as it is a doctor or a lawyer.

Dr. Raja:
Yes. So, there’s a lot of us, like second generation Indian, and maybe probably third generation now. For people like me, there was a huge IT boom, we got married to engineers who were working here. So, we ended up coming over here and doing this. So, I think that’s part of the reason. And I know that there are a lot of doctors who still go through the process of the USMLE and have that goal, even when they’re studying and come through.

Dr. Jim Dahle:
Are doctors in India considered rich?

Dr. Raja:
Yes, they are.

Dr. Jim Dahle:
They are, even though they’re making $410 a month as residents and maybe $1,500 to $2,000 a month.

Dr. Raja:
Well, they’re making much more.

Dr. Jim Dahle:
They’re still at the top of the stack over there.

Dr. Raja:
Yes. Compared to the common Indian, they are making a lot more. And like I said, most doctors will work in both the public and private sector and the sky’s the limit about how much they can earn. Hard work and they make money.

Dr. Jim Dahle:
Yeah. That’s common in a lot of countries with the public sector. What lessons do you think are there for the US? What should they adopt from the Indian system that might make our system better?

Dr. Raja:
I don’t know about adopting, but I think that the fact that a poor person can still get care free and medication is free is so much better. I’ve worked in community health. And sometimes I get disappointed that people have to pick between food and medication.

Dr. Jim Dahle:
Better to have a two-tier system than have some people that aren’t eligible for any system.

Dr. Raja:
I think that’s good.

Dr. Jim Dahle:
How about your family, when you compare notes to doctors in your family that are practicing there, what are the things that you’re jealous of that they enjoy and what are they jealous of that you enjoy?

Dr. Raja:
My brother-in-law’s a neurosurgeon. I’m going to use him. Let’s go with what he would say. This quality of life, the fact that I have my weekends off, at least as a primary care physician, the freedom to travel, the pollution, the space, they probably would be envious of that. The help that they get, the domestic help, the easy access. Those are things that people over here cannot really afford to do.

Dr. Jim Dahle:
Now, how did Indian doctors save for retirement?

Dr. Raja:
If they work for the government, I know that they have pension plans. There are also other insurances like life insurance and stuff that they do. They have bonds. Most of the time it’s just an incentive to be frugal. They are frugal, they save and there’s real estate investments, mostly land, agriculture land. And real estate tends to be one of the things that they more commonly do. And I know that in my parents’ generation, probably not much, but now they’re more interested in stocks and bonds and mutual funds and equities and stuff like that.

Dr. Jim Dahle:
And do they tend to invest in stocks that are in India or do they tend to look for US or European stocks?

Dr. Raja:
They tend to invest in stocks that are in India.

Dr. Jim Dahle:
Just because they know the companies well, they’re household names. Now inflation in India has been significantly higher over the last few decades than here. It ranges anywhere from 4% to 13%. Our inflation just went up. Most recently it was reported out as about 5%. But what lessons can we learn from Indians about how to live in an environment with significant inflation?

Dr. Raja:
I had to think about this one. It’s true that inflation has gone up, but I feel like the salaries have also gone up. Like I said, as an intern I was paid 2,000 rupees. Now they are paid 20,000 rupees. So, proportionately the salaries, at least for the people who work in the public sector, have gone up.

Dr. Raja:
And the other thing about India is that you could live on very little or a lot. You could just choose, I could buy a meal for 10 rupees and I could also go into a five-star restaurant and blow 1,000 rupees on the same kind of meal. So, they’re very resilient people, maybe their savings go down a little bit.

Dr. Raja:
And inflation is not across the board, like uniform for everyone. So those who have a little bit, like if the petrol and diesel are more expensive, it doesn’t really affect the person who is bicycling to work every day. The population is so large that I don’t think it affects them the same way that it affects us here in the US.

Dr. Jim Dahle:
People have adjusted to it. And it sounds like they just get used to it, maybe their salaries are rising faster than they otherwise would and their expenses rising faster than they otherwise would. But it hasn’t been a catastrophe, it doesn’t sound like it.

Dr. Raja:
No, it hasn’t.

Dr. Jim Dahle:
Okay. So, we can’t have a discussion on a financial podcast about India without talking about gold. What is the deal with gold among Indians?

Dr. Raja:
Gold is sentimental, it’s cultural, it’s auspicious. It’s good luck. The women love it. And I think as a security, especially for women who were not working and dependent on their husbands’ incomes, I think it was just whatever they could hold on to for their own financial security. And so, I think that’s where it started, probably. And it’s just seen as a good luck thing. And the richer you get, then you don’t really care about gold so much, but I find that for everyone else, holding onto some gold is prestigious for them. It’s a very cultural thing.

Dr. Jim Dahle:
And not to mention it typically keeps up with inflation, which probably helps in that respect.

Dr. Raja:
Yes, it does.

Dr. Jim Dahle:
Yeah. What do Indians think about cryptocurrency?

Dr. Raja:
I think there’s a lot of interest. I know that the Reserve Bank of India does not really approve of it. There’s a lot of interest around it, but I don’t think that many people know much about it or are so free to invest in it.

Dr. Jim Dahle:
So, one of the things I’ve found interesting over the years, and I’ve gotten questions about from docs with family in India or docs in India, or that split their time between the two countries. They’re always asking me whether they should put money in Indian banks, convert it to rupees and put it in there.

Dr. Jim Dahle:
Because Indian banks have paid interest rates of 3% to 10%. Right now, that’s what they’re paying. And if I go down to the bank down the street, I can make 0.05%, or I find a high yield savings account that right now is paying 0.6% or something. And I can just put that money in India and make 3%, 7%, whatever. Do you think that’s a good idea for a US investor to put money in an Indian bank?

Dr. Raja:
I don’t think it’s a good idea.

Dr. Jim Dahle:
Why not?

Dr. Raja:
Because the dollar currency value has always held strong and whatever we make in interest is probably not going to make sense.

Dr. Jim Dahle:
You think you’re losing it in a weakening rupee, a constantly weakening rupee, you lose the extra interest you’re making. Would you change your mind for someone that spends a significant part of their life in India? If you’re splitting your time there or you’re planning to retire there or something like that, do you think it makes sense to keep some money in rupees?

Dr. Raja:
Yes, I do. My mom still lives there. My sister lives there. I visit them every couple of years or every year. I want some money over there just for convenience purposes. If I were to retire and spend my time there, I would definitely keep some money there, but it’s not going to be for investment purposes.

Dr. Jim Dahle:
Keep your money in the US even if you were living there for the most part. Now, the Indian tax brackets range from 5% to 30%. That’s a little lower than US brackets. What are your thoughts about the Indian tax system?

Dr. Raja:
For this one I had to ask friends who actually filed taxes over there.

Dr. Jim Dahle:
You never had to while you were in med school.

Dr. Raja:
No, I didn’t have to. And the thing is, most of India does not pay income tax. They don’t even fall into the tax brackets. There are very few people, I think about 2% actually are filing income tax. So that’s a very small number. And the government does not want to be unpopular by increasing individual tax. So, they don’t do that. But what they do is that they make up in almost everything else, all the indirect taxes, commodities, and goods, and real estate, entertainment and everything else is taxed so that they make up.

Dr. Jim Dahle:
So, a lot of the money’s coming from sales taxes rather than income taxes.

Dr. Raja:
Yes.

Dr. Jim Dahle:
Because in the US, the actual federal income tax, I think there’s something like 47% that don’t pay any money into it. They think they do, but they get it all back at the end of the year. If you include the payroll taxes like social security tax, it’s a far higher percentage. Almost everybody that’s working is paying some sort of taxes in the US. But only 2% in India. It’s a very different system.

Dr. Raja:
It is a very different system.

Dr. Jim Dahle:
Do you get the sense that there’s a lot of people that should be paying taxes and aren’t? That they’re cheating or that it’s corrupt?

Dr. Raja:
It’s a cash-based economy. So, detecting sources is very difficult unless they work for the government or work for institutions and things like that. It’s not trackable. So, I think that’s there. But I also think a vast majority of people probably don’t even fall into the bracket. I think you have to make over 600,000 a year to even file taxes. So, they probably don’t even fall into it.

Dr. Jim Dahle:
All right. Now another thing that often happens, particularly first-generation docs, they move here and now they’re making the big bucks. They’re making $200,000 – $300,000 – $400,000 a year, and they’ve got all this family in India that’s living off $400 a month or whatever, and they tend to send a lot of money back. What should US docs with family in India know about sending money or moving assets between the two countries back and forth in each direction?

Dr. Raja:
I think that they should know the tax laws, both sides, and also the legal implications, especially with assets and money not so much but assets. I want to say someone sending money from India over here, they can send up to 250,000, but there’s still laws over there. Like if you go over 700,000 per person per year rupees coming over here, they have to pay tax 5% or something like that. And same thing from when we send money from here, there’s a gift tax over, I want to say, $40,000. So that’s there too. So, I think it’s important to know those things.

Dr. Jim Dahle:
Maybe stay under those limits when you send money.

Dr. Raja:
Yeah. And then the other thing is, I don’t think that people who actually make it over here or that are ambitious and all that don’t have families that live on $400 per month.

Dr. Jim Dahle:
They’re usually a little more well to do over there.

Dr. Raja:
Yeah. They’re middle class probably or upper middle-class.

Dr. Jim Dahle:
Interesting. Okay. So, let’s say somebody wanted to go practice in India either short-term or long-term. Let’s say you wanted to go practice in India. You went to med school in India, you did residency here. You’ve now practiced here for years and years, and you want to go back to India. How hard would it be for you to go there and practice?

Dr. Raja:
I don’t think it’s hard because they do like having American boarded physicians or UK trained physicians that come back. And so, finding a job will not be too hard. I already registered once I’d finished med school with my state. So, I have the state medical council registration. I think there’s a national medical council now. Just like going to any other country, we would have to look at the requirements and do the paperwork and should be able to get in.

Dr. Jim Dahle:
All right. I think we’ve talked about just about everything I could think of talking about. But you have the year now of 30,000 or 40,000 high income professionals, mostly doctors. What have we not talked about that they should know?

Dr. Raja:
I would go general with this one. First thing is, there is a lot of economic disparity all over the world, right? So, we live in a place where we have the freedom of choice and we have all this education. And so, I think that we should appreciate that, for one thing. And the second thing is, financial literacy. I started kind of late. So, for people who are like me, women, especially, especially people of color, women immigrants, anyone who thinks that that’s a disadvantage, they can always start late and still do it, just one step at a time.

Dr. Jim Dahle:
Awesome. That’s great advice. Well, thank you so much, Dr. Raja for coming on the White Coat Investor podcast. I think a lot of people will find your story interesting and as well as learning a little bit more about practicing in India. I know I did. I think it’s fascinating to learn how medicine works in other parts of the world. And so, I appreciate you coming on. Thank you so much for your time.

Dr. Raja:
Thanks for having me.

Dr. Jim Dahle:
I thought that it was interesting to learn a little bit more about living in India, coming here from India, practicing in India, et cetera. I hope you found that interesting as well. It’s a fascinating country. An eighth or sixth of the people on the planet live in India. So obviously, there’s a lot of different people and opinions and politics as you move from one state to another, throughout the country. But it’s great to get an introduction to it and learn a little bit more about it.

Dr. Jim Dahle:
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Dr. Jim Dahle:
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Dr. Jim Dahle:
Thanks to those of you who’ve left us a five-star review and told your friends about the podcast. It really does help spread the word. Our most recent review came in from CCharmed who said “The number one finance podcast to listen to if you’re a professional. As a doctor who is constantly on the move it is hard for me to always pause and reevaluate my assets. This is a great podcast to listen to on the go and also to give you reassurance in our crazy world where is the best place for you to invest your money. Thank you so much for giving back to all the working professionals out there”.

Dr. Jim Dahle:
Thank you for your kind review. Thanks for listening to the podcast. It wouldn’t be much of a podcast without listeners. So, I appreciate what you do. It’s difficult work. If nobody said thank you today, let me be the first. Thanks for what you do.

Dr. Jim Dahle:
Keep your head up, your shoulders back. We’ll see you next time on the White Coat Investor podcast. And if you need help before then we’ll see you on the forums, the subreddit, the Facebook group, or just shoot me an email [email protected] I’d love to hear from you. Thanks.

Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney or financial advisor. So, this podcast is for your entertainment and information only and should not be considered official personalized financial advice.





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