India worried about continuation of the ballooning trade surplus with US as the world’s largest economy heads into depression
Shankar Hotabi
Jan. 25, 2008

India enjoys a healthy steadily growing trade surplus with America. Business process outsourcing (call center handling business) and contractual hourly Information Technology labor are the main source of exports.

As the American economy dips into depression due to faltering real estate prices, subprime meltdown, excessive consumer debt and skyrocketing imported energy prices; Indian exports to India can suffer in an accelerated fashion.

American businesses plan to cut down on use of Indian IT services by as much as 40% this year and another 40% by end of next year. Unless US economy can recover sharply, Indian exports to US can be in jeopardy.

"I think the US economy may bounce back and there is no conclusive evidence of recession in that economy. However, if there is slowdown in the US, Europe and other parts of the world, it will affect our exports," Finance Minister P Chidambaram said in Davos this week. India is worried although official financial ministry keeps saying there is no problem if US hits a recession.

Unfortunately India does not understand that US is already in a state of depression through underemployment. The employment is close to full but most people cannot their ends meet with stagnating wages and job qualities.

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