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By:

C.S. Krishnamurthy

21 June 2025 at 2:15:51 pm

Risk Refines Returns

An anxious investor entered his adviser’s office, clutching a file of stock charts. He was convinced he had found the perfect moment to enter the market. His plan was to wait for the precise dip, jump in, make quick gains and exit smartly. The adviser smiled gently, the way a teacher smiles at a student who thinks the syllabus ends with the first chapter, and began narrating a small tale that has stayed with me for long. He spoke of two farmers. One sowed seeds as the monsoon clouds gathered,...

Risk Refines Returns

An anxious investor entered his adviser’s office, clutching a file of stock charts. He was convinced he had found the perfect moment to enter the market. His plan was to wait for the precise dip, jump in, make quick gains and exit smartly. The adviser smiled gently, the way a teacher smiles at a student who thinks the syllabus ends with the first chapter, and began narrating a small tale that has stayed with me for long. He spoke of two farmers. One sowed seeds as the monsoon clouds gathered, tended the soil, and trusted sun, rain, and time. The other waited on a hilltop for the perfect cloud, believing precision mattered more than action. He kept climbing, analysing patterns. When the rains finally came, the first had green shoots breaking the earth. The second had only reasons. The adviser paused and said markets behave similarly: prepare early, stay invested, and let time do the real work. This simple story captures a truth that investors often forget. Most people desire higher returns, but very few want the risk that accompanies those returns. In wealth management, the principle remains constant across decades: high return requires high risk, low risk brings low return. What separates successful investors from frustrated ones is not luck or timing, but the ability to align risk, return and time horizon with the purpose of money. Risk Realities Consider a parent whose child’s college fees are due next year. A rising equity market may look attractive, but it is the wrong choice for such near-term needs. Even a small correction can upset careful plans. Here, safety matters more than growth because the goal is fixed and non-negotiable. Now contrast this with a young professional in her twenties avoiding equity due to fear of volatility. Ironically, she takes the bigger risk. By shunning growth assets, she risks losing future purchasing power. For her, time is a powerful ally that cushions volatility and rewards patience. Wealth planning begins with understanding three elements. The first is risk capacity. This is the financial ability to take risk. It depends on income, savings, liabilities and, most importantly, time horizon. A thirty-year window offers room for market ups and downs. A one-year window does not. When capacity is misunderstood, investors either become too aggressive or unduly conservative. The second is risk attitude. This has nothing to do with spreadsheets, and everything to do with psychology. Some investors can see their portfolio fall twenty pc and continue sleeping peacefully. Others panic if their units fall two pc. Knowing one’s emotional bandwidth is vital. A perfect portfolio is useless if the investor abandons it during the first storm. Behavioural finance teaches us that panic selling, not market decline, destroyed long-term wealth. Balancing fear and greed matter. The third is investment need. This is often ignored because investors chase returns without asking what return is actually required to achieve their goals. If a goal needs nine pc annual growth, why chase fourteen pc with twice the risk. When all three elements align, portfolios stop being products and begin to act as strategic tools that move families closer to their life outcomes. Purpose Planning Remember, risk is not a bad word, nor an enemy to fear, but a knife to be handled wisely. In skilled hands, it slices food, and in a surgeon’s care, heals bodies with precision. In careless use, it wounds deeply. When aligned with goals and time, risk builds wealth. Long-term investing lies in respecting its sharp edge and using it with patience and discipline. In the end, the adviser reminded the anxious investor that the greatest financial risk is not volatility, but a portfolio that does not match its purpose. Timing the market might offer a few lucky victories, but time in the market builds lasting wealth. Seeds grow not because the farmer predicts rain, but because he plants them early and let nature work. That lesson holds for every investor. Goal setting, disciplined risk alignment and the patience to let compounding work turn uncertainties into opportunities. Wealth is not created by chasing returns, but by respecting time.  If you are ready to follow discipline in investment, risk can turn into opportunity. (The writer is a retired banker and author of ‘Money Does Matter.’ Views personal.)

Empowering Indian Science: From Red Tape to Real Impact

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Indian science is going through an important change. Recent government decisions are making the country’s research environment more supportive, flexible, and focused on national needs. These steps reflect a stronger recognition of science as a national priority in moving beyond procedural bottlenecks and acknowledging its central role in building a strong and self-reliant India.


One of the most impactful changes is the complete overhaul of procurement procedures for scientific research. Until now, buying research instruments and lab equipment involved multiple approvals, quotations, and mandatory use of government platforms, often leading to long delays. The new rules are a game-changer.


The direct purchase limit for scientific instruments and consumables has been raised from Rs.1 lakh to Rs.2 lakh, allowing quicker purchases without needing quotations. The purchase committee limit (through Limited Tender Enquiry) has been increased from Rs.10 lakh to Rs.25 lakh. The Advertised Tender Enquiry limit has been raised from Rs.50 lakh to Rs.1 crore. For large-scale procurements, Vice Chancellors and Directors of institutions can now approve Global Tender Enquiries up to Rs. 200 crore, giving research institutions far greater flexibility than ever before.


In another bold step, the government has allowed scientific goods to be purchased outside the Government e-Marketplace (GeM). Earlier, GeM was the only route for procurement, but this often did not meet the specific needs of laboratories or offered limited suppliers. Now, researchers can directly access better products and vendors, save precious time and ensure the quality of scientific work is not compromised. These simplified procedures significantly reduce red tape and speed up procurement across India’s research labs.


At the same time, another key reform focuses on reducing the administrative burden on Principal Investigators (PIs). Until now, PIs were expected to handle both science and paperwork by tracking expenses, filing reports and managing grant-related documents. These tasks took away valuable time from research. Shifting these responsibilities to trained staff in institutions is a much-needed change. It allows scientists to focus on what really matters: thinking, discovering, and mentoring.


Together, these reforms show a deeper understanding: that science must be allowed to grow without unnecessary roadblocks. But freedom also comes with responsibility. As India aims to become a developed country by 2047, science must help solve real problems like providing clean water, affordable healthcare, sustainable farming, reliable energy and safe cities. Research must not only advance knowledge, but also improve people’s lives.


To achieve this, the way we measure success in science also needs to change. Rather than just counting the number of papers or patents, we should ask: What impact did this research have? Did it solve a real problem? Did it lead to a useful product, policy, or technology? Funding agencies can support this shift by linking grants to clear goals, regular reviews, and mentorship—making sure that independence leads to meaningful results.


At the same time, science is being reshaped by artificial intelligence. AI tools are now used to analyse data, review literature, suggest ideas, and even write papers. These tools can be helpful if used carefully. But there is a risk: relying too much on AI can make science shallow. A paper that sounds polished but lacks original thinking adds little value.


That’s why scientific integrity today means more than just avoiding fraud. It also means being thoughtful, honest, and creative. AI should support human thinking, not replace it. Research institutions must set clear rules on how AI should be used, encourage transparency, and make sure that the peer review process looks for depth, not just fluency.


Another ongoing problem is the delay in releasing project funds and fellowships. For many young researchers, these delays cause frustration, uncertainty, and slow down progress. Fixing this is essential. Predictable and timely funding is as important as autonomy as it helps scientists plan and work effectively.


In addition, research institutions must build stronger internal systems. Good science depends not just on smart researchers but also on skilled administrators, grant managers, and lab technicians. These support roles must be recognized and strengthened. A successful research system needs both talent and teamwork.


India must now create its own model for scientific growth that matches its challenges and strengths. Simply copying what other countries do will not work. India needs a system that blends basic research with real-world problem-solving, cutting-edge tools with cost-effective solutions, and global ideas with local action.


To make this happen, stronger collaboration is needed. Scientists must work more closely with industry, government and civil society. Research hubs, startup incubators and joint projects can help convert ideas into useful applications. Community participation can also help ensure that innovations are practical and accepted.


Science must also connect better with the public. People should understand and care about science. Including topics like environment, sustainability, and critical thinking in education will help build a generation that supports evidence-based decisions. Outreach through digital tools, schools, and local programs will make science more inclusive.


These recent reforms have set the stage. But it is now up to scientists, institutions, and policy-makers to use this opportunity well. Will the system encourage creativity? Will it support those who take bold steps? Will it stay focused on national progress? If approached with clarity and commitment, this moment can become a turning point. Indian science can break free from old limits, grow with purpose, and play a central role in building a confident, capable and developed India.

(The author is the former Director, Agharkar Research Institute, Pune and Visiting Professor, IIT Bombay. Views personal)

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