Washington: The United States is in discussion with India trying to understand the potential impact of the increase in fee of categories of H-1B and L1 visas on Indian companies, reports PTI.
"We have been explaining to the Indian government the specifics in the legislation, and trying to understand the potential impact on Indian companies," State Department spokesman P J Crowley told reporters here.
But beyond that, he said, he was not sure that there was any particular next step.
After the Border Security Bill was passed by the Congress and signed into law by US president Barack Obama, India has expressed its concern over the new legislation would mainly impact the Indian companies as it allows increase in fee of categories of H-1B and L1 visas on them to raises more than $550 million of the $650 million required in the bill to enhance the security of the US-Mexico border.
Meanwhile, writing for a blog on The Wall Street Journal, Rupa Subramanya Dehejia, who writes on the political economy-based out of Mumbai, said the increase in visa fee would only help politicians.
"All said and done, if you look at the equation, the Indian IT industry will have to fork out a few million dollars, but that is the cost of doing business in an increasingly protectionist environment. So, while the senator may score a marginal political victory and the US. Treasury will make a few bucks out of this, the Indian IT industry will continue to prosper for the foreseeable future and come out ahead despite the legislation," Ms Dehejia said.
"If the senator really wanted to eliminate or make it more difficult to bring Indian engineers over, he would have suggested drastically curtailing the quota to say 20,000 workers a year. But everyone including the senator knows that this would have disastrous consequences to the US economy," she said.
"Those positions would simply be outsourced or the companies would move their operations offshore. In either case, they will circumvent US jurisdiction and lead to job losses in the US," she said.
Notably, India has called the fees discriminatory and is planning to raise the issue as an unfair trade practise at the World Trade Organisation (WTO).
New Delhi: The Indian economy grew by an impressive 8.8% during the quarter ended June on the back of robust manufacturing growth, reports PTI.
However, certain sectors like financial services restrained the growth in the economy, which had recorded 6% growth rate in April-June period of 2010-11.
Agriculture and allied activities grew by 2.8%, higher than 1.9% in the year-ago period, but it is nowhere near the target of 4% pegged by the government in the medium term.
Manufacturing expanded by strong 12.4% in April-June, 2010 against a mere 3.8% growth rate in the same period last year.
Construction, too, grew by 7.5% compared to 4.6% a year earlier.
Among services, financial, insurance and real estate services expanded by just 8%, against a growth rate of 11.8% in the year-ago quarter, while community social and personal services growth slowed down to 6.7%, against 7.6% a year ago.
However, trade, hotels and communication services rose by 12.2%, against 5.5% during April-June 2010.
The government expects economy to grow by 8.5% this fiscal. Though the gross domestic product (GDP) numbers for the April-June quarter are higher than that of 8.6% in the previous quarter, they lag expectations of 8.9%-9.4% forecast by various experts.
The emerging market growth story is still playing out, but these markets are bound to be affected by cyclical growth patterns like any other economy
Emerging markets are quite popular these days. As the developed world bumps along with 1% or 2% growth and rampant talk of double-dip recessions, emerging markets seem to roar ahead with ever more impressive numbers.
The growth rate in China is always impressive. Lately it has been even more so. It has chalked up its usual double-digit growth. But other BRIC countries are not far behind. India is forecast to grow at 8.5%, continuing its impressive trend of the past few years in the teeth of the worst global recession in almost 80 years. Even better than India is Brazil with a growth rate of 9%. The IMF expects emerging economies as a whole to grow 6.9% this year and 6.8% in 2011, far better than their forecast of 2.3% in 2010 and 2.6% in 2011 for developed countries.
Growth like this attracts investors like bees to the proverbial honey. In one week at the end of July, global emerging markets funds took in $796 million while US money market funds lost $15.3 billion. According to JP Morgan, emerging market bond funds have taken in $50 billion in fresh money surpassing 2009 when they took in $46 billion. They are forecast to break all records by the end of the year with a record inflow of $75 billion. According to Morningstar, the bond rating agency, the second ranked fund for new assets was a global bond fund, Templeton Global Bond. Of course these markets have their adherents. The China Stock Digest, a China-oriented investment letter, crowed that "China has resumed its economic boom in full. It is as if the global economic crisis had never happened." It also quotes none other than former Federal Reserve Chairman Alan Greenspan as saying, "China is the most dynamic capitalist economy in the world." The statement is interesting not for its truth, but for the perspective of someone who helped cause one of the most severe economic disasters in history. The fact that Mr Greenspan thinks things in emerging markets are great should be a tip-off that there are problems brewing. First we should start with deficits. While China is running a surplus of 4%, Germany surpasses it with 5%. The US is famous for its 3% deficit, but India is on course to run a deficit at the same level. Brazil's is a little better with a projected deficit of 2.7%.
The amount of stimulus money sloshing around Western markets may not prevent a double-dip often because it is seeking greener pastures elsewhere. According to the IMF, low interest rates have created a carry trade increasing capital flows to emerging markets that drive up asset prices.
Much has been written about whether China is experiencing a real-estate bubble. Its real-estate market has increased 61% in the last six months alone. But real-estate booms know no boundaries. In Brazil prices are also going wild. In some markets it has increased 100% in the last 14 months. At the start of the recession India's real estate market fell 25%, but has now recovered with a vengeance.
Capital inflows and vibrant economies of course lead to inflation. Indian inflation is already above double digits at 11.6% followed by Turkey at 8.7% and Brazil at 5%. China is supposed to have inflation under control and is thought to be 'tightening'. Still it has to be seen to be believed. Besides real estate, food prices are up. Wholesale corn prices in local markets in China are at record levels and to control prices China is importing the highest amount of grains since crop failures in 1994-1995.
All of these problems are reflected in the various stock markets. From their crash lows the Indian, Brazilian, and Chinese markets made remarkable recoveries. They increased 96%, 53% and 22% respectively. But these fabulous numbers were made a year ago. Since then the picture has not been as bright. From January of 2010, the Indian stock market has increased 4%, but the Brazilian market is off 9% and dynamic China is down 20%, the worst performing market in the world after Greece.
It is not only that these markets are down, they are also, despite the recent press, volatile with more inherent risk. According to Moneylife magazine (http://www.moneylife.in/article/72/8312.html and (http://www.moneylife.in/article/72/8347.html), Indian securities markets are "narrow, shallow, illiquid and concentrated in the hands of a few individuals located at a few centres." The Chinese stock market has been described for many years as worse than a casino.
The emerging market "story" is certainly seductive. Vibrant new economies with huge hard working, well trained and inexpensive populations have found the formula for explosive growth. These economies are supposed to have decoupled from more developed economies and will, for the foreseeable future be the source of vast profits available for anyone who believes. Sadly the reality can be much more mundane. They go up and down like everything else.