The deal is done. With a 86 of 99 possible votes in favour, the US Senate voted overwhelmingly for the US-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act. The bill that will be signed into law by the US President in due course marks a significant change in Indo-US relations. Even in the absence of provisions like fuel supply guarantees and fuel stockpiles for the safeguarded reactors, it is a significant win for India. Besides opening of foreign direct investments in this sector and the entry of private firms into domestic nuclear energy programs, what the deal highlights, is a global recognition of the unique status of India in the world today.
As the mess in the US financial system spreads across the Atlantic, the reaction of European governments have been as swift and on an unprecedented scale as governments rushed in to prop up ailing financial institutions with huge cash injections or full-blown nationalization. Governments of the Benelux countries - Belgium, Netherlands and Luxembourg have agreed to inject $16.4 billion into Fortis - the first major euro zone bank to falter. In Germany, the $51.2 billion bailout of the No 2 commercial property lender Hypo Real Estate Holding narrowly escaped failure due to disagreement on their participation in the guarantees. In the UK, just a year after the collapse of the Northern Rock, the government has nationalized the assets of buy-to-let specialist Bradford and Bingley. In Ireland, government announced a $560 billion guarantee to cover deposits and debts of six biggest banks. And the bourses from the US to Japan have already caught a chill as the $700 billion US bailout package struggles through the hallways on Capitol Hill.At home, an outflow of 1700 crores by FIIs on the closing day of the week, sent the Sensex plunging 529 points to 12532 with Metals taking the hardest pounding with a drop of 7%.. Though inflation continued to hold at the +/- 12% levels, a strengthening dollar is offsetting the fall in oil prices and sending the OMCs into a tizzy. Oil and Gas Index lost nearly 6% while the consumer durables ended just over 4% in the negative.
The exit of Tata Motors Nano project from Singur in West Bengal brought the curtains down on a sorry political comedy that played out over several months with the TMC pitted against the CPM in what could only be a short-sighted struggle for relevance. Besides putting the company's 1500 crore investment at risk, the decision also affects hundreds of auto ancillary units that would have to relocate along with the mother plant.How can companies guard against such setbacks? What can be done to manage growth and profitability in the backdrop of so much of uncertainty? Can the management team in corporate houses do more to stabilize performance through graded response to macroeconomic developments? There are many who are of the opionion that the $700 billion bailout of the financial services sector seeks only to stabilize a business model that no longer meets the dynamics of the interconnected 21st century market where the flutter of a butterfly wing in one part of the world can spawn a hurricane in another.
We live in interesting times - change appears to be the only constant.
Thursday, October 16, 2008
Thursday, October 2, 2008
Black September!
Six events and counting – the developments in the Kashmir imbroglio, the tardy response to the Kosi disaster, the escalating communal riots in Orissa, the events in Singur, the acknowledged failure of the NREGS and the latest terrorist strikes in the heart of the capital - defined the past fortnight and put a question mark over India’s capability to develop a policy and governance framework that is both efficient and responsive to the complex and evolving needs of the nation.
On the positive side, the waiver obtained from the exclusive Nuclear Suppliers Group (NSG) was exceptional and as always, attributed to the tireless efforts of a few good men. The event did not go completely unopposed. Western editorials were quite scathing in their attack on India’s seemingly outrageous attempts to bypass the NPT regime stating that the ban on trade with countries that break the non-proliferation rules has been the chief underpinning of the NPT regime. However, the recognition by the current US government of the strategic alignment of common interests of the world’s oldest and largest democracies might still pave a bipartisan way for the 123 agreement through the US Congress.
The events in the global financial markets, specifically in the United States, has been unprecedented both in terms of the nature of the disaster and its magnitude. Lehman Brothers filed for bancruptcy, Merrill Lynch has agreed to be purchased by Bank of America, Bear Stearns has gone, Goldman Sachs and Morgan Stanley have been converted to retail commercial banks. With AIG and WaMu floundering and the bailout of Freddie Mac and Fannie Mae by the Fed, the financial market as we knew it ceased to exist. Once the full extent of the crisis unravels through bouts of deleveraging, someone will have the time to write an obituary to the business model that governed Wall St for more than half a century.
Not exactly the brightest September by a long shot!
On the positive side, the waiver obtained from the exclusive Nuclear Suppliers Group (NSG) was exceptional and as always, attributed to the tireless efforts of a few good men. The event did not go completely unopposed. Western editorials were quite scathing in their attack on India’s seemingly outrageous attempts to bypass the NPT regime stating that the ban on trade with countries that break the non-proliferation rules has been the chief underpinning of the NPT regime. However, the recognition by the current US government of the strategic alignment of common interests of the world’s oldest and largest democracies might still pave a bipartisan way for the 123 agreement through the US Congress.
The events in the global financial markets, specifically in the United States, has been unprecedented both in terms of the nature of the disaster and its magnitude. Lehman Brothers filed for bancruptcy, Merrill Lynch has agreed to be purchased by Bank of America, Bear Stearns has gone, Goldman Sachs and Morgan Stanley have been converted to retail commercial banks. With AIG and WaMu floundering and the bailout of Freddie Mac and Fannie Mae by the Fed, the financial market as we knew it ceased to exist. Once the full extent of the crisis unravels through bouts of deleveraging, someone will have the time to write an obituary to the business model that governed Wall St for more than half a century.
Not exactly the brightest September by a long shot!
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