Nuclear Deal and Beyond

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.