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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.)

Delhi’s Winter of Discontent

The capital’s annual smog crisis is no longer a seasonal aberration but a policy failure in slow motion.

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In recent years, winter in north India has become a season of dread instead of relief from the monsoons. Nowhere is this more viscerally felt than in Delhi, which has slipped from a polluted megacity into the ranks of the world’s most toxic capitals.


Until the early 1990s, Delhi’s air, though imperfect, remained largely breathable. A smaller population, fewer vehicles and favourable wind patterns helped disperse emissions. That equilibrium collapsed with astonishing speed. The city’s vehicle stock surged from roughly 1.5 million in the late 1980s to nearly 7.5 million today, while public transport and regulatory capacity failed to keep up. Fuels sold until 1999 contained sulphur levels of nearly 10,000 parts per million – a staggering one hundred times today’s permissible limit. At the same time, relentless construction, shrinking green spaces and dust-laced urban expansion quietly dismantled the city’s natural air filters.


Pollution Trap

The result is a winter ritual of suffocation. Delhi’s annual average PM2.5 concentration now hovers near 93 micrograms per cubic metre - six times the World Health Organisation’s safe limit. In November 2024, the Air Quality Index (AQI) climbed to a near-apocalyptic 491. A year later, on November 27th, 2025, it touched 396 - an exposure equivalent to smoking nine cigarettes a day. From October to February, meteorology conspires against the city. Cold air settles beneath warmer layers, forming a lid that traps pollution close to the ground. Winds weaken, rainfall disappears, and north-westerlies ferry smoke from neighbouring farm belts. Nestled within the bowl of the Indo-Gangetic Plain and hemmed in by the Himalayas and Aravalli range, Delhi struggles to ventilate itself even when emissions fall.


Every autumn, farms in Punjab, Haryana and western Uttar Pradesh set fire to crop residue to prepare fields rapidly for the next sowing. Stubble burning once accounted for as much as 38 percent of Delhi’s winter PM2.5 load. Subsidies for machinery, penalties and satellite monitoring have halved those emissions. Yet even a reduced share remains a powerful seasonal accelerant.


More stubborn is vehicular pollution, which contributes 40–50 percent of Delhi’s fine particulates year-round. Stricter Bharat Stage VI standards slashed per-vehicle emissions, but explosive fleet growth has wiped out the gains. Diesel cars still dominate. Public transport carries less than a tenth of daily commuters. Past fixes have either delivered fleeting relief or fizzled under weak enforcement. The uncomfortable truth is that cleaner engines cannot compensate for unchecked car dependence.


Delhi’s construction boom adds another layer of grit. Dust from building sites and demolition accounts for up to 40 percent of PM10 and roughly a fifth of PM2.5 in winter. Cleaner construction rules introduced in 2021 promised to cut dust by 70 percent. In practice, small builders evade scrutiny, monitoring is threadbare and winter construction surges precisely when dispersion collapses.


Though Delhi shut its three coal-fired power stations by 2018, it remains ringed by 11–12 plants within a 300-kilometre radius. Together, they emit sixteen times more sulphur dioxide than crop-burning fires. Heavy industry has mostly moved out, but brick kilns, illegal units and small factories persist, thriving on regulatory blind spots.


Waste is another silent culprit. Delhi generates 14,000 tonnes of garbage daily; over 3,000 tonnes still rot in landfills, releasing methane and noxious gases. Waste-to-energy plants, meant to incinerate the problem, emit toxic metals and dioxins, while hazardous ash often piles up near residential colonies. A proposed new facility in Bawana has already sparked local revolt.


Festive firecrackers complete the winter’s toxic cocktail. After Diwali, PM2.5 concentrations recently averaged nearly 800 micrograms, peaking at over 1,700 - almost 30 times safe levels. Blanket bans between 2020 and 2024 collapsed under illegal sales. Restaurants and street vendors, many still using coal- and wood-fired tandoors, add to the burden. Though cleaner fuels have cut some emissions, biomass burning in peri-urban homes alone still contributes nearly a quarter of winter particulates. Broken roads, dust storms and methane from long-saturated landfills ensure that everyday pollution never truly pauses.


Devastating Toll

The health toll is devastating. Delhi’s air now injures lungs with the efficiency of tobacco smoke. Asthma, chronic obstructive pulmonary disease and heart ailments surge each winter. In October 2025, three out of four households reported illness; nearly half sought medical care. The brain suffers too. Fine particulates are increasingly linked to dementia, anxiety, depression and psychosis. Hospitals have recorded sharp rises in neurological and psychiatric admissions, underlining how pollution erodes both body and mind.


The economic cost is just as grim. In 2019 alone, Delhi lost $5.6 billion - about 6 percent of its GDP - to pollution-related damage. Nationwide losses approach $37 billion annually. During severe smog episodes, hospital admissions jump by up to 100 percent. Workplace productivity drops by nearly a third. Tourism falls by half. Construction slows, commerce falters and outdoor labour retreats indoors.


Delhi’s chief defensive weapon, the Graded Response Action Plan (GRAP), introduced in 2016, triggers restrictions based on pollution levels. It does save lives and trims AQI by modest margins. But it is a mere seasonal fire extinguisher. Other initiatives like the Metro’s expansion, cleaner fuel standards and mechanised dust sweeping have produced measurable but fragile gains, repeatedly overwhelmed by urban growth.


High-profile gestures have fared no better. Smog towers purify tiny islands of air at immense cost. Odd-even traffic rules reshuffle journeys without shrinking vehicle numbers. Cloud seeding experiments were quietly shelved. School closures merely shift exposure indoors. Firecracker bans repeatedly collapse against cultural resistance, compounded by inconsistent enforcement and political equivocation.


Delhi’s crisis persists because governance remains fragmented and pollution largely migratory: nearly two-thirds of toxic load drifts in from outside the city. Planning remains silenced by political timidity and citizens have normalised ‘pollution season’ as an unfortunate but inevitable ritual.


What is required is ruthless enforcement, removal of end-of-life vehicles, mandatory scrubbers on all regional coal plants. Over the long run, polycentric urban planning with green corridors, stubble-free farming and biomass-free heating is needed. None of this will work without political courage and citizen restraint.


Delhi was once a pioneer in clean transport. Today it stands as a cautionary tale of unchecked urbanisation and uneven enforcement. India’s ambition of becoming a “Viksit Bharat” will remain hollow if its capital cannot breathe.


(The author is a Chartered Accountant with a leading company in Mumbai. Views personal.)

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