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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

Silent Money Killer: Loss of Buying Power

In personal finance, we often worry about losing money in the stock market, dislike the volatility associated with equities or mutual funds, or feel anxious about missing out on a hot investment tip. Yet the biggest threat to our wealth is far quieter and far more dangerous: loss of buying power. It is the invisible erosion of your money caused by inflation - a force that operates every single day, without pause, without headlines, and often without being noticed until it is too late....

Silent Money Killer: Loss of Buying Power

In personal finance, we often worry about losing money in the stock market, dislike the volatility associated with equities or mutual funds, or feel anxious about missing out on a hot investment tip. Yet the biggest threat to our wealth is far quieter and far more dangerous: loss of buying power. It is the invisible erosion of your money caused by inflation - a force that operates every single day, without pause, without headlines, and often without being noticed until it is too late.
Inflation does not take away your capital visibly. It does not reduce the number in your bank account. Instead, it reduces what that number can buy. A Rs 100 note today buys far less than what it did ten years ago. This gradual and relentless decline is what truly destroys long-term financial security. The real damage happens when people invest in financial products that earn less than 10 per cent returns, especially over long periods. India’s long-term inflation averages around 6 to 7 per cent. When you add lifestyle inflation - the rising cost of healthcare, education, housing, travel, and personal aspirations - your effective inflation rate is often much higher. So, if you are earning 5 to 8 per cent on your money, you are not growing your wealth. You are moving backward. This is why low-yield products, despite feeling safe, often end up becoming wealth destroyers. Your money appears protected, but its strength - its ability to buy goods, services, experiences, and opportunities - is weakening year after year. Fixed-income products like bank fixed deposits and recurring deposits are essential, but only for short-term goals within the next three years. Beyond that period, the returns simply do not keep pace with inflation. A few products are a financial mess - they are locked in for the long term with poor liquidity and still give less than 8 per cent returns, which creates major problems in your financial goals journey. To genuinely grow wealth, your investments must consistently outperform inflation and achieve more than 10 per cent returns. For long-term financial goals - whether 5, 10, or 20 years away - only a few asset classes have historically achieved this: Direct stocks Equities represent ownership in businesses. As companies grow their revenues and profits, shareholders participate in that growth. Over long horizons, equities remain one of the most reliable inflation-beating asset classes. Equity and hybrid mutual funds These funds offer equity-debt-gold diversification, professional management, and disciplined investment structures that are essential for long-term compounding. Gold Gold has been a time-tested hedge against inflation and periods of economic uncertainty. Ultimately, financial planning is not about protecting your principal. It is about protecting and enhancing your purchasing power. That is what funds your child’s education, your child’s marriage, your retirement lifestyle, and your long-term dreams. Inflation does not announce its arrival. It works silently. The only defense is intelligent asset allocation and a long-term investment mindset. Your money is supposed to work for you. Make sure it continues to do so - not just in numbers, but in real value. (The author is a Chartered Accountant and CFA (USA). Financial Advisor.Views personal. He could be reached on 9833133605.)

A Waiver in Name Only

Maharashtra’s ambitious 100 percent tuition fee waiver for girls risks becoming another well-meaning policy undone by poor implementation.

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On July 8, 2024, the Maharashtra state government issued a circular that should have signalled a transformative moment in women’s education. In an election-season flourish, the ruling Mahayuti government had announced a full, 100 percent tuition fee waiver for girls enrolled in undergraduate vocational courses. The promise was bold and the intention noble: to raise female representation in higher education from a meagre 36 percent to an aspirational 50 percent. It was also meant to be universal and inclusive, covering all castes and categories. With Rs. 905 crores earmarked annually, the state appeared serious about righting a long-standing gender imbalance.


But a year later, like many sweeping government schemes in India, this one too risks being choked by bureaucratic sluggishness and institutional indifference. A closer look reveals an initiative that is more cosmetic than concrete, undermined by red tape, confusion and poor communication. The promise may have captured headlines, but for most girls trying to claim their rightful place in lecture halls, the fee waiver remains out of reach.


To begin with, the scheme’s scope is far narrower than publicised. It applies only to undergraduate students enrolled in 543 specified vocational courses. Postgraduate students are excluded. So are those enrolled in private or deemed universities. Girls from families earning more than Rs. 8 lakh a year don’t qualify, nor do those already benefiting from other government scholarships. And critically, no separate application exists. Students must navigate the standard, convoluted scholarship portal in a process that is both opaque and discouraging.


This would not be as problematic if the waiver were applied at the time of admission. But it is not. Students are asked to pay tuition fees upfront, with the vague promise of a refund later. In the meantime, they are subject to pressure from college administrations, some of whom bar students from sitting exams unless fees are paid in full. The result is a Kafkaesque situation where a ‘free education’ policy demands payment first and clarity never.


The psychological toll of this ambiguity is substantial. For working-class families balancing precarious incomes, the prospect of shelling out tens of thousands of rupees with no guaranteed reimbursement is daunting. Some abandon the process entirely. Others, believing the government’s grand announcements, approach social organisations for help, only to be turned away as these NGOs assume the state has taken care of it. In some cases, girls have dropped out altogether.


Adding insult to injury is the near-total absence of outreach. With SSC and HSC results freshly released and admissions in full swing, there has been no meaningful publicity campaign. There have been no campus circulars, no targeted media outreach, no community-level engagement. Confused parents are left relying on rumours and half-truths.


If this is what implementation looks like in year one, the outlook for the future is grim. Last year, officials from the Higher Education Department reported a paltry 5,720 applications under the scheme. Refunds have not yet materialised even for these. What is the point of allocating hundreds of crores if the machinery to disburse it is rusted and unresponsive?


There is still time to salvage the promise of the scheme. But for that to happen, two things must change. First, the policy must be made automatic. No girl eligible under the scheme should be asked to pay fees upfront. The onus must shift from families to institutions. Second, there needs to be a concerted awareness campaign, especially in rural areas and marginalised communities. Girls and their families must know what they are entitled to and how to get it.


The deeper malaise is one of political will. Too often, social welfare in India is about optics with schemes designed more for headlines than for impact. Maharashtra’s tuition fee waiver risks becoming yet another example of this phenomenon. Unless the government follows through with rigour, transparency and empathy, the scheme will remain what it increasingly looks like today: a paper promise, floated in good faith but doomed by poor execution.


Education is too vital to be left to fall prey to bureaucratic inertia. The state must do better because the girls, on whose shoulders rest the ambitions of an equal future, deserve better.


(The writer is a lawyer and president, Student Helping Hands. Views personal.)

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