Future of outsourcing continues to be bright: Young

At a time US president Barack Obama has proposed changes in tax laws to curb outsourcing, visiting US economist to India Douglas J Young termed it as politics and said that future of outsourcing continues to be bright.
       
"I think future of outsourcing continues to be bright, that is fundamental bottom-line," Professor of Economics with Montana State University, Young, said in an interview. Young is on tour of Gujarat delivering lectures on economics organized by the American Embassy's Mumbai centre and has spoken at various places in the state like Jamnagar, Rajkot and the city.
       
Obama proposing change in tax laws of that country had reportedly said, its a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if
you create one in Buffalo, New York. He has proposed to levy taxes on companies outsourcing to India and other countries.
       
"What is happening now is largely politics. Obama when he was a candidate talked about outsourcing. He has tried to follow through on some of that, but it is still not clear that what he has proposed will pass the American Congress," Young said.  

"The American Chamber of Commerce has come out in opposition and there are variety of interest groups that are opposed to Obamas change in tax laws," he said. Secondly, even if it does pass (in American Congress) it is not clear what would be the impact, because it proposes to increase the tax on American companies, but not on its
foreign subsidiaries, many of which are operating in India, Young said.
       
"India is very good at outsourcing, India has tremendous cost advantage, it is not going to go away even if tax law of US is changed," Young said. Speaking about Indian economy, Young said, "When the economies of rest of the world are shrinking, India is
slowing. The US economy is expected to shrink by 3 per cent.

European countries' economies will shrink by about 4 per cent this fiscal. India will grow at about 6 per cent which is less when compared to previous years". Indian economy is expected to grow faster once the global economic situation improves, he further said.
       
"The main long term challenge that India faces is the issue of inclusive growth, people at the lower end of income has to benefit. The challenge there is education, literacy,
basic health care and helping people to participate in the new economy," Young said. Speaking about the American governments policy to bail out General Motors which recently filed for bankruptcy, Young said, "I think it is a strong statement to talk in terms
of socialism in this case. This is largely a temporary arrangement. Once the situation improves American Government will step out of this arrangement".
       
Speaking about recovery of US economy, Young said, "It will take couple of years for US economy to come out of negative growth".