The decision of the US to suspend fast-track H-1B visas will hurt India in the 'short run' but will hugely damage the American economy, former chief economist of the World Bank Kaushik Basu said today.
"US suspension of fast track H-1B visas. Will hurt India in the short run & then help. But will do huge damage to US," Basu, who is currently professor of economics at Cornell University, said in a tweet.
The US has announced that from April 3, it would temporarily suspend the 'premium processing' of H-1B visas, which allowed some companies to jump the queue, as part of overall efforts to clear the backlog.
The suspension came even as New Delhi pressed for a fair and rational approach on the matter from a trade and business perspective.
By paying an additional premium of USD 1,225, companies were able to get an H-1B application processed within 15 days, whereas a standard process takes 3-6 months.
The suspension of the fast-track processing widely used by the Indian IT industry may last six months.
It also puts pressure on Indian IT companies as any changes in visa regime may result in higher operational costs and shortage of skilled workers for the Indian outsourcing industry.
In the past few weeks, there have been proposals to overhaul the popular H-1B visa regime through various legislations which have added to the worries of the Indian IT sector that is battling slower growth, currency fluctuation and cautious client spending.
The US accounts for over 60 percent of the Indian IT export revenues.
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