Barack Obama’s re-election as President of the US could lead to the Congress delaying most of the fiscal tightening scheduled for year-end, making an agreement on deficit reduction unlikely before mid-December. While equity markets could retrace some of their gains if the automatic tax hikes and spending cuts that effect in January— popularly called the fiscal cliff — are not prevented, captains of Indian industry believe the legislative logjam might end sooner than anticipated. Without a timely agreement, $570 billion of fiscal stimulus could be pulled out and lead to fall in US GDP growth of 3% in 2013.
“There is a status quo and we are hopeful that their approach will be more pragmatic,” said Infosys executive co-chairman Kris Gopalakrishnan. “We don't think there is any impact of the elections and it was rhetoric as seen in the past.”
“The second term of a US president is the more fascinating one,” said Mahindra Group chairman Anand Mahindra. “With politicking out of the way, it’s time to build the real legacy.”
India Inc has been wary of Obama’s rhetoric against outsourcing, but for second term, concerns seem to have given way to hope. “This is a good development for India,” Godrej Group chairman Adi Godrej said on the sidelines of the World Economic Forum on India.
“Between two large economies, there will be issues and concerns. Outsourcing is also a concern and I hope it will be addressed soon,” said Godrej.
For many, Obama's stance against outsourcing hardly moved beyond the rhetoric. “It is on expected lines but there was some heat reported in the last few days. I think it will be good for India. There will be continuity,” said Sunil Bharti Mittal, chairman, Bharti Group. When asked about concerns over outsourcing he said: “I have heard this in the previous election. We saw Clinton go very heavy on outsourcing and we did not see anyone of these impacting our outsourcing business or relationships.”
The antidote to all concerns seems to be growth. “Now the focus will be on driving economic growth, which will lead to increased prosperity and greater job creation in the US, as well as act as a catalyst for growth across the world,” said N Chandrasekaran, CEO & MD, Tata Consultancy Services, which got 53% of its Rs 48,900 crore fiscal 2012 revenues from the US.
Moreover, companies like TCS, Infosys and Wipro have tweaked their recruitment strategies