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Trudeau Govt announces two-year cap on International Student visas; A step that will HIT Canadian Economy like never before

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Canada announced Monday a two-year cap on international student visas to ease pressure on housing, health care and other essential services amid record immigration. Minister of Canada and Immigration Marc Miller announced that fees for new study visas will be cut by 35 percent in 2024 as international students have been indulged in fraudulent activities and strained the state and the housing and health systems.

According to the minister, the number of new visas distributed will be limited to 364,000, while last year almost 560,000 student visas were issued. Prime Minister Justin Trudeau and a cabinet meeting this week in Montreal will prioritize affordability and housing, according to a government student. Miller also said that they were trying to stabilize the number of people entering the country each year, while the pressure on housing increases.

The government says there are now about a million international students in the country – more than triple a decade ago – and that number has continued to grow without any intervention. Canada’s population hit a record 40 million as many Canadians reportedly struggle with rising living costs, including rent and mortgages.

Elaborating, Miller said there are unscrupulous schools that profit from the high tuition fees of international students without offering a solid education in return. In some cases, the schools are pathways to Canada for students who can adjust their visas for permanent residence.

“It is not the intention of this program to have sham commerce degrees or business degrees that are sitting on top of a massage parlour that someone doesn’t even go to and then they come into the province and drive an Uber. If you need a dedicated channel for Uber drivers in Canada, I can design that, but that isn’t the intention of the international student programme,” said the immigration minister.

Opposition Conservative leader Pierre Poilievre called the government’s latest move to cap international student visas “a mess” and blamed Trudeau for granting study permits to tens of thousands of students who attend fake schools.

Who will be impacted?
The new proposals will also set limits on post-graduate work permits issued to foreign students, which will likely encourage them to return to their home countries. People pursuing master’s or post-doctorate programs will be eligible for a three-year work permit in Canada. Spouses of international students enrolled in other levels of study, including undergraduate and college programs, will no longer be eligible, Miller said.

The vast majority of international students come from India and China. About 40 per cent of foreign students come from India, with China coming in second with about 12%, according to official data from 2022. However, Canada experienced a major 86 per cent decline in the issuance of study permits to Indian students towards the end of last year, owing to the diplomatic dispute over the murder of a Sikh separatist terrorist in Surrey.

International students contribute about C$22 billion ($16.4 billion) annually to the Canadian economy. The move will hurt many educational institutions that had expanded their campuses in the hope of a continued inflow of students. Ontario, the most populous province, receives the biggest share of international students, where the cap has fuelled concerns about a shortage of workers.

Restaurants across Canada are grappling with labour shortages with nearly 100,000 vacancies, and international students made up 4.6 per cent of 1.1 million workers in the food service industry in 2023, a lobby group told Reuters last week. Canadian banks had also benefited from the immigration of new students, as each student was required to have a Guaranteed Investment Certificates (GIC) of more than C$20,000, a prerequisite to cover living expenses for the students.

Indians might be the biggest nationality after the cap on international student permits by Canada.

At 37%, Indians were the biggest national cohort to be issued study visas by Canada in 2023. Though the number had seen a dip after the recent Indo-Canadian diplomatic spat. Indians see the study visa route as a cheaper and easier way to Canadian permanent residency, and then citizenship.

However, the popularity of Canada as an international student hub has led to a housing shortage in the North American country, resulting in a staggering 7.7% increase in nationwide rents in December, according to Statscan.

This housing crisis has adversely affected Prime Minister Justin Trudeau’s popularity, among Canadians already grappling with rising living costs, and has bolstered the position of opposition leader Pierre Poilievre.

While the visa caps aim to address domestic concerns, they also bring about economic repercussions for Canada. International students are a substantial financial asset, contributing an impressive $22 billion annually to the Canadian economy.

The decision to reduce their numbers will impact educational institutions that have expanded in anticipation of a continuous student inflow, particularly in Ontario, the province receiving the highest share of international students.

The Canadian Alliance of Student Associations (Casa), a student advocacy group, criticised the cap.

“The biggest problem is that … there’s been announced a cap that is a reaction to the housing crisis,” said Casa Director of Advocacy, Mateusz Salmassi, adding that what is needed is more support and housing for international students.

The economic impact stretches beyond education, as international students, particularly those from India, play a pivotal role in sustaining Canada’s gig economy.

As Canada navigates through these visa restrictions, the impact on both Indian students and the Canadian economy is evident. Striking a balance between economic gains and the well-being of its citizens remains a complex challenge for the Canadian government.

The outcome will not only shape the future of international education in Canada but also determine the country’s economic resilience in the years to come.

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