Indo-US bilateral trade has been upbeat, except for the nuclear deal that is facing a stormy period. According to the Indian Finance Minister, USA will not go through the impending recession. Even if it does, it is not likely to impact India. Having said that, in the last week of January 2008, the actually story seems to be different. But trade and commerce, is affected. Investors are aggrieved at the trading activity coming to a grinding halt frequently in the last three months. Indian exports to the US are less than earlier and dependence is less as it is also exporting to rich European nations, China and Japan. Asian markets have also felt the slump when Dow Jones hit the low notes. How much can India withstand the impact?

In the first place, is the 2008 recession coming at all? If the rest of the world recession impacts other nations, how can India remain insulated? The crisis of US recession is looming on its policies in the Middle East and home turf. There is no immediate concern for Indians. The jobs are not being threatened as yet. BPOs are still working 24 X 7 and jobs are being generated in other sectors. Real estate has more or less stabilised in many cities and small towns. Infrastructure activity has not slowed down either. The software professionals are returning home and Indian students prefer to study in Australia, New Zealand and Britain.

Since US is one of the major super powers, a recession–mild or deeper will have eventual global consequences? USA may cut their capital investments into the country if they have to control recession at their end. The year 2008 has not started on a good note for the US economy. Till the stocks don’t climb upwards chances are that investors will loose more money. Despite world recession and India’s optimistic outlook, the results will not show at least in the next two years. Is a recession coming to Indian shores? Highly unlikely. The rupee may have appreciated against the shrinking dollar. But Indians are enjoying the new found material wealth and flaunting it. The reigns have to be tighter at the US end till the economy becomes buoyant.

India can get affected by the BPO units becoming less aggressive. The American food chains that have opened up will be impacted. There could be down sizing on staff and advertising. The equity market will see a slide in a few months, if things go out of control. Consultants across the world are hoping that they will be able to keep their clients upbeat in the face of recession. The prolonged recession is likely to result in further weakening of the dollar. According to the World Bank officials, the credit crunch will reflect on decline in business development, unemployment, weaker consumer outlays and longer period of depressed consumer prices. In India strong technological advancement have engineered a buoyant growth rate. There is still time for the storm to come to India. ~ By N. Nagpal, economist and category author. 2008.