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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.)

Biomedical Waste: From Neglect to Regulation

The rise of HIV/AIDS and the 'Syringe Tide' of 1987 paved the way for global recognition of the biohazard threat and the need for regulation.

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In the early days of healthcare, little attention was paid to the proper disposal of medical waste. Infectious materials, sharps, and other hazardous waste were often mixed with general waste, posing significant risks to both healthcare workers and the environment. The lack of awareness and regulations led to sporadic and unsafe practices.


However, during the 1980s, the rise of HIV/AIDS and other serious health concerns brought the issue into sharper focus. It is reported that, for the first time, the topic of medical waste management was discussed at a meeting convened by the World Health Organization’s regional office for Europe in Bergen, Norway, in 1983.


The ‘Syringe Tide’ episode of 1987, described in last week’s article, further heightened concerns. This incident underlined the urgent need for specialised medical waste management services and appropriate regulations.


In the United States, the Medical Waste Tracking Act of 1988 categorised waste from hospitals as hazardous and required institutions to follow systematic guidelines for handling and disposal. As a result, a new industry of medical waste service providers emerged, offering comprehensive solutions for waste collection, transportation, treatment, and disposal.


The ‘Syringe Tide’ disaster also sent shockwaves across Europe and other Western countries. Eventually, stringent rules and regulations were introduced to govern the handling, transport from the source of generation, treatment, and disposal of medical waste.


Introduction of legislation for managing medical waste in India

In India, the first case of HIV was reported in 1986. At the time, there were no specific rules or regulations to manage medical waste. Due to the absence of legislation and a general lack of awareness among policymakers and other stakeholders, medical waste was not treated as hazardous. It was routinely mixed with general municipal solid waste and dumped in landfills or open dumping grounds.


To compound the growing burden of municipal and hospital waste, disposable plastic items were introduced into the healthcare sector in the 1970s. These items quickly gained popularity due to their convenience and durability. By the 1980s and 1990s, the use of disposable plastic items in hospitals had significantly increased, driven by the broader adoption of plastics in both daily life and medical practice.


The wake-up call: Dr B.L. Wadhera vs Union of India

In the 1990s, several NGOs and individuals in Delhi began drawing attention to the issue of unregulated medical waste management. In 1995, Dr B.L. Wadhera filed a writ petition in the Hon. Supreme Court of India, highlighting the neglected problem of medical waste disposal in Delhi. The petition pointed out that the government had failed to recognise the hazardous impact of openly dumped medical waste on public health and had not classified it appropriately as hazardous waste.


As a result, the Hon. Supreme Court directed the Government of India to appoint a committee of experts and develop a clear legislative framework for the classification and proper management of medical waste. This landmark judgement exposed major regulatory gaps and set the wheels in motion for the creation of medical waste management legislation in India. More on this in my next article. Till then, have a good weekend!


(The writer is an environmentalist.)

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