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.
I would rather levy a income-tax (however of very low rate) the NRIs (Non-resident Indians) who did their professional education through any publicly funded institution. Here is Jagadish Bhagwati supporting this idea.
However, the diaspora approach is incomplete unless the benefits are balanced by some obligations, such as the taxation of citizens living abroad. The United States already employs this practice. This author first recommended this approach for developing countries during the 1960s, and the proposal has been revived today. Estimates made by the scholars Mihir Desai, Devesh Kapur, and John McHale demonstrate that even a slight tax on Indian nationals abroad would substantially raise Indian government revenues. The revenue potential is vast because the aggregate income of Indian-born residents in the United States is 10 percent of India's national income, even though such residents account for just 0.1 percent of the American population.
Revenue thus generated can be used to continue funding the institutions and also can be used to give bonuses to the staff.