We are in for uncertain times. US is never short of dishing out advise to all & sundry how to manage their economies. How we wish they walk the talk? They have been telling us to make the rupee fully convertible. Wise counsel have prevailed, as we would also have been in the same shithouse that is subprime. We would have had to write off billions like the Europenas banks UBS etc, not to mention the Biggies like Citibank. The irony would have been we could have carried the US cans of follies.
They should talk less and be prudent. There are far too many excesses. Even if a CEO is dismissed for his faults, he is compensated millions. It is a win win situation for them. Take all risks and even if they fail, you have made it!
US economy is still many times others and naturally all will be affected. The real beneficiaries will be China, as they can put a bid for all the assets in US at one US dollar. That can happen at the way things are going. Bush has a silly smile nowadays.
Our young has only seen good times. It will be prudent and less suicidal if things turn nasty. One cannot bank on perpetual rise in income. Few decades ago, it was a blessing to be employed. First class engineers were feeling lost. I can see many excesses, be warned.
President Kennedy's father got a tip from the shoeshine boy in 1930. "I made couple of thousand in the stock market, boss". The wise man sold off all stocks and paid the shoeshine for the tips.
I think the author has taken the decoupling theory too far to support his view. I have never seen an article in which a respected economist said that there is absolutely no issue when US economy goes down. It is foolish for any economist to think that when the Number One economy in the world goes down nothing happens for the rest of the world (Or atleast China and India). What they are saying is these countries would still be able to pull off significant growth numbers. (Also many economists differentiate between china and India here. India not being an export oriented economy would certainly be able to pull off great numbers (At least 6% growth of GDP) on the strength of ots own internal growth. When it comes to China the negative effect would be more undoutebly as its exposure to US is very significant. So bottom line - I disagree with author that India would be hard hit (unless if he defines hard hit as being 8% growth instead of 9%). Added to this I disagree with many economists who are shouting from the top of the roof of the impending recession in US. US at the most might turn a bit negative in one quarter (At least 2 quarters of negative growth is defined as recession). Several of these economists have predicted all this many times before and they have been proved wrong again and again. Just look at the holiday sales numbers. People belonging to no other country in the world shop like Americans thus keeping their economy rolling.
RE:Re: Indian economy to be hit hard, if US slows down
by PanchanathamIyer Thiagarajan on Dec 11, 2007 05:53 AM Permalink
I am in agreement with Mr Jayaram. Today with the increased accent on globalisation it is difficult to understand that any slowdown os us economy will not adversely affect the ecnomic health of India or other countries. thiagarajan P
RE:Re: Indian economy to be hit hard, if US slows down
by hormaz mistry on Dec 11, 2007 05:55 AM Permalink
I am not very good at economics but would you agree with me if i said that once the value of the dollar hits rock bottom, isn't it likely that most back office jobs, R&D facilities and the so called Call Center operations could be moved back to the US & Europe (To reduce their unemployment) or to more cheaper venues? Thus if the rest of the world is looking towards Asian growth to save the day for them, then they are sadly mistaken as the west might just take Asia down with it?
RE:Re: Indian economy to be hit hard, if US slows down
by anoop prakash on Dec 15, 2007 06:57 PM Permalink
yes Mr Mistry,
that can be possible because If the Re becomes stronger because of the tumbling dollar, this could happen. The software industry is already feeling the pinch becausing of the rising strength of the Re against the dollar. Many of them are holding on by hedging their currencies.
But I have a doubt - is the Indian Re the only currency that is becoming stronger against the dollar or are other asian currencies facing the same. The middle east currencies are will not face this as they are pegged to the dollar except for Kuwait as they have dropped the pegging and gone in for open basket. Smart thing to do but unfortunately not the other Arab states. Good Question tho Mr Mistry.. I hope somebody out there answers this question.
RE:Re: Indian economy to be hit hard, if US slows down
by Watchman on Dec 11, 2007 05:34 AM Permalink
Good anlysis J. If the US gets hit it has an impact all over the world. The sad thing is that gradually "corruption" has crept in to US economy and governance too - look at how the energy, pharma, etc sectors influence policy making there. And that sums it all up - the US "leads" the world into chaos possibly?
RE:RE:Re: Indian economy to be hit hard, if US slows down
by Maharaj Malik on Dec 11, 2007 04:13 AM Permalink
Jayaram, It seems u r an old faited desi guy in US .. Do you understand economy ? Its demand-supply. Who told you only us can generate demand. INDIA got a billion and more. Demand is here Supply is also here. Got it ? If you want to comedown to India, welcome aboard.
RE:Re: Indian economy to be hit hard, if US slows down
by Debmalya Ghosh on Dec 11, 2007 04:49 AM Permalink
May I request you to try to put your (stupid) brain in gear before opening your big mouth? Please shut up. Illeterates like you are unwelcome.
RE:Re: Indian economy to be hit hard, if US slows down
by Amakant Chaudhary on Dec 11, 2007 04:29 AM Permalink
I think you should read Jayarams post before shooting your mouth off. You've just agreed with him.
RE:RE:RE:Re: Indian economy to be hit hard, if US slows down
by CO on Dec 11, 2007 04:48 AM Permalink
ha ha Maharaj Malik has made an idiot of himself he has not even gone through what jayaram has written :D :D
RE:Re: Indian economy to be hit hard, if US slows down
by concerned on Dec 11, 2007 05:04 AM Permalink
Interesting article Jayaram. Re: Shopping numbers. I think you are mistaken here to believe that its american people who are spending the money. I am based in Europe and I can tell you with certainity that people are travelling in large numbers to do shopping in US simply because of the exchange rate between Euro annd Dollar. You are very right in rest of the article. I would watch before I pass my judgement on recesssion in America.
RE:RE:Re: Indian economy to be hit hard, if US slows down
by Symphony Voice on Dec 11, 2007 05:23 AM Permalink
Well, I did not say only americans are spending. What I said was that americans are spending big so as to keep their economy floating (And to a great extent China's). And certainly the fact that - US dollar has become cheap - further fuels this as tourists from Europe are coming here and buying. Also the Fed is trying hard to fuel the fire possibly cutting anywhere between 50-100 basis points in the next few months (Tomorrow may be 25-50 basis points cut). Lets watch and wait and see how US economy unravels itself in the next coming month.
For NRIs who are antagonistic towards India and Indian IT professionals in this form, its time that you got Ur US citizenship. Quality of life is something that cannot be helped with. India has always been like this, but India has its own charm. US has its own charm. But to look down upon someone shows the hatred or jealousy that you have within you. After so many years, India is named as one of the fastest growing economies in the world. It generates so many jobs. India is developing. Doesn't that make you happy. I understand that the slowdown here in the US will make our life a bit hard, but that sadness is very small as compared to the happiness that one should feel when they look at India now. I understand that there are many things to be done, poverty, etc, but we are taking steps forward. So, please stop being abusive to your countrymen. Go India Go !!!!!!
RE:Be Happy Folks
by pasu pathy on Dec 15, 2007 07:36 PM Permalink
i have just returned from the US after travelling there extensively for two months. Everything is fine there..not to worry.. Indians can find their ways and means anyway..we dont really depend on US alone! be happy kids..dont worry too much..
US is facing crisis in various areas one being Manufacturing and other being Sub-Prime Mortgage Crisis.
The problem with the Manufacturing is self created and it did not happen overnight.
The crisis would be more serious in the case of the later one..not only Sub-Prime Mortgage Crisis impacted the Banks and Financials institution who are involved in but the construction of new homes and sales of existing homes and depending construction related manufacturing ..
there will fewer new homes built..and fewer jobs..
Plus add the silver lining .. Iraq war spending in billions of dollars..
The only hope is somehow american exports pickup..like big ticket items .. one should understand when Citibank had a cash crunch it had to look East to Abudhabhi Inv. company for 10 Billion dollars or so..
Gas prices have gone up lately which will increase inflation and everything including goods and services will become more expensive..
The situation is gloomy..US should address the fundamental issues not just band-aid the problem..
The current situation is likely to be here for a while..its not a short term thing..
It is the consumer spending which will keep the economy going.. but how far...
India is the major exporter of IT related services to US. I do not see that being changed..The rupee has emerged stronger and will be for a while.. IT(BPO) companies should trim their costs and look for more means of generating revenue via offering more services whic
RE:US economy downturn and its impact on Indian IT(BPO) Companies
by hormaz mistry on Dec 11, 2007 05:53 AM Permalink
I am not very good at economics but would you agree with me if i said that once the value of the dollar hits rock bottom, isn't it likely that most back office jobs, R&D facilities and the so called Call Center operations could be moved back to the US & Europe (To reduce their unemployment) or to more cheaper venues? Thus if the rest of the world is looking towards Asian growth to save the day for them, then they are sadly mistaken as the west might just take Asia down with it?
Very interesting and thought provoking article. Excellent point on how the largest economy conveniently delinks during a period of increased globalization.
By the way friends, "Aparna from Atlanta" does not seem like a real person. It probably is just someone trying to entice people into a fight by making disparaging remarks. There is no need to just start blaming each other.
The following messages portray the jealousy of most non IT guys. Not sure why they feel so.. Jealous because they earn more than the traditional coolies? Jealous because they send Billions of dollars every year to India? Jealous because most of the money they send strengthen the economy? Yes, they are earning more. Let them. They are not earning legally.
RE:Oops.. who is not a coolie?
by RamRamRam on Dec 11, 2007 02:10 AM Permalink
What is wrong in calling the IT guys in India as coolies? They work from 11:00 AM to 11:00 PM and spend 3 hours in commute, with no quality life. They do not have backbones to raise against the companies dictatorship policies. They will not protest against anything.
Recently all IT companies in India has said there employees has to work compulsory 9 hours to balance to lose of Income due to Raise in INR. There is no official protest by the employees in any form as they are used to work 12-15 hours a day. There is no unity among them. The IT companies will squeeze and suck the blood of all their employees. The chances of getting High BP, Diabetics and Heart Attack is very high because of unhealthy working and competitive working conditions.
How do we call the people working in worst working conditions? Indian IT Industry is a SWEAT SHOP
RE:Oops.. who is not a coolie?
by NARENDER RAWAT on Dec 11, 2007 04:03 AM Permalink
You seem to be a good for nothing guy. If you have been in some good IT company you would have much better picture in your mind. So just stop crticizing IT people and don't show your frustration to others.
RE:Oops.. who is not a coolie?
by Kumar Anil on Dec 11, 2007 04:12 AM Permalink
RamRam is correct.. There is nothing about criticizing, it just a matter of fact. IT company's are like factory..look at Infosys...its big factory in bangalore and ITians are worker as good as Forging worker. Common man face the fact.
RE:Oops.. who is not a coolie?
by Indian on Dec 11, 2007 05:21 AM Permalink
Have you ever visited any of the Indian IT companies? If no please visit some of them and get some data collected from employees there about work culture and facilities they get.
Any developed country relies heavily on IT for bank transactions, online investments , shopping , ticket reservation, weather monitoring,health care , insurance claims, hotel booking, tracking criminals, wireless networks and communications etc etc. A time will come when Indian IT companies will start getting modernization project from Indian companies and government in large chunks and domestic IT job market will also be ablet to absorb so called IT coolies as many people want to call them. India churns out so many engineeers every year and 80% of them are not employable in their respective fields. Even if Automobile and construction companies want to hire there engineers they won't be able to perform day to day work. Thanks to IT industry all these guys got jobs and decent salary. Those who did not prefer getting in IT feel left out and spit venom against IT coolies. When a sigle IT company opens anywhere in India for every 1000 IT coolies u get employement for another 200 people indirectly. You get couries guys for posts , u get cleaners , auto wallahs , u get peons and then they pay electricity bills and phone bills etc too. Did anyone ever bothered to ask some other professional to justify their cost to company then why is this an issue with only IT guys? Only because they are more in media than others? Stupid TV artiste earn much much more. Can the crap. Stop praying for the doom of indian IT.
RE:Indian IT
by Pradip Parekh on Dec 11, 2007 01:23 AM Permalink
actually, a downturn in usa would impel cost saving/cutting moves across the industries, which should actually play to india's advantage because of much cheaper labor. however, the downturn in usa is not likely to happen despite the subprime woes, whcih the wall street journal says is not a very significant pct of gdp. under bush govt, free market will thrive. however, a democrat in whitehouse could mean distortions would creep back in.
Irrespective of "reactive" rate cuts by various central banks, RBI was very pro-active in managing the inflows and outflows of money in/from India. The world has taken notice and has appreciated it and many big financial institutes has hailed RBI & SEBI's measures as the best in Asia. I dont remember the name, but one financial instt. even hailed RBI as the best central bank in Asia.
Decoupling or not, since India's growht is mostly based on local factors, any downside in US will definitly affect us, specially in US-centric domains like IT.
RE:Superb RBI measures
by bayareago on Dec 11, 2007 04:57 AM Permalink
RBI and Finane ministry created so much inflation. Look at property values( and other commodities) 3 years ago and now, it just skyrocketed. It cheaper to buy property in USA/CANADA than India ( with pollution, lack of infrastructure, over population, corruption etc ). Only IT people and people earning over 6 laksh/annum can live in this inflation. Think of engineers,govt employees, clerks etc. who earn less salary than IT.
When US economy slows down, let use assume that only 5% of the total exportable quantity gets affected. However, one should understand that to dispose this extra 5% inventory, everybody will have to resort to price cutting and once price cutting war begins, profit comes down and economy will slow down. So, start thinking ways and means of disposing this extra 5% without lowering profits. This is a very difficult task, if taken seriously.
