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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.)

‘In a year, my department will be generating revenue by its own’

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When Nitesh Rane took charge as Minister for Fisheries and Ports in December 2024, he was chided for having been allotted low-profile departments. Barely five months later, the Master of Business Administration graduate has proved his critics wrong. Securing agricultural status for fisheries, introducing policies for shipbuilding, repair and scrapping and promoting the use of artificial intelligence (AI) have been among his notable achievements. In an exclusive conversation with Kiran D. Tare, Editor, The Perfect Voice, the first-time minister outlines his future plans for the departments he oversees.


Tell us about the Artificial Intelligence initiatives you have taken.

The Honourable Chief Minister, Devendra Fadnavis ji, has set an ambitious target of establishing Maharashtra as the artificial intelligence (AI) hub of India. Acting on his directive, we ministers have recognised the transformative potential of AI and have begun integrating it into our departments to boost productivity, enhance accountability, and make our work more result-oriented.


In the fisheries department, we have brought in a government-affiliated company called Marvel to deploy AI solutions. We first identified the key challenges fishermen face—chief among them being unpredictable weather conditions and the need to improve productivity. Analysing weather patterns through AI emerged as a promising solution. That is why we enlisted Marvel to help us use data-driven insights to increase efficiency in our operations.


As the guardian minister for Sindhudurg district, I have also initiated efforts to make Sindhudurg the first AI-enabled district in Maharashtra. This will significantly enhance administrative efficiency, especially in areas where we face a shortage of human resources. I am committed to promoting the use of AI across both the fisheries department and the district administration. The wider adoption of this technology will, in my view, directly contribute to the progress of Maharashtra.


Can you elaborate on how the common fisherman will benefit from this initiative?

The most immediate and tangible benefit lies in understanding weather patterns. Take last year, for instance. In Sindhudurg, we experienced rainfall until December. Since fishing is suspended during the monsoon, such an extended season disrupts the industry and severely affects the livelihoods of fishermen. If the monsoon lasts six months, that’s six months of lost income.


This is where AI proves useful. By analysing historical and real-time weather data, we can forecast patterns more accurately. We can also identify specific patches in the sea with a higher concentration of fish. With this information, fishermen will know where to go for better yields and when it is safe and productive to do so. They can adopt more effective techniques and significantly improve their catch.

 

How do you view the decision to grant agricultural status to fishing?

It is one of the most significant decisions taken by our government in its first 100 days. The demand for agricultural status for fishing had been pending for a long time, and I am proud that we were able to fulfil it. The benefits are manifold. It brings fishermen under the same umbrella as farmers, entitling them to all the schemes and protections that the agricultural sector enjoys.


Let me give you an example. Earlier, whenever there was a storm or cyclone causing widespread damage, we didn’t have a framework to offer relief to fishermen. Now, with agricultural status, they are eligible for special relief packages similar to those offered to farmers during natural calamities.


Moreover, this change allows fishermen access to the banking system, subsidies, and both central and state government schemes. Their economic stability will improve, they will enjoy greater credibility with financial institutions, and ultimately, they will be able to lead more secure and dignified lives.

 

Do you think Maharashtra can lead the country in the fisheries sector?

I believe it has the potential to do so. We have recently extended our recorded coastline from 720 km to 877 km, which reflects the scale of our marine resources. Besides this, we are giving equal importance to inland fishing in regions like Vidarbha, Marathwada and western Maharashtra. A lot of fishing activity happens there, and we are working closely with those communities.


We are also collaborating with Nagpur Fisheries University to explore ways to increase productivity. For example, we’re taking measures to reduce encroachments and remove debris from water bodies.


The central minister for fisheries, during a recent visit, acknowledged Maharashtra’s impressive progress. We are not stopping there. I am conducting an experiment to improve the quality of fish production. We are taking assistance from experts in Norway and Israel to develop fish farms. At present, such advanced fish farms exist only in Norway. The experts have visited our sites and made valuable recommendations. We are in the process of implementing those. You will see a marked difference in the near future.

 

Where does Maharashtra stand in the port sector?

Maharashtra has a total of 48 ports, of which 15 are currently operational. The most ambitious among them is the Vadhvan port, a major project initiated by the Honourable Prime Minister. We have also introduced our own shipbuilding, ship repair and shipbreaking policy, thus making us the only state in India with an independent, dedicated policy in this area. This will not only attract substantial investments but will also create employment opportunities for our youth. We are targeting investments worth over Rs. 6,000 crore through this initiative. We are confident that this will significantly boost the revenue of the Maharashtra Maritime Board while enhancing both productivity and job creation.


Water transport is another area we are keenly developing. We are working on waterway connectivity within the Mumbai Metropolitan Region (MMR) and beyond. Talks are underway with the Kochi Water Metro to replicate their model in Mumbai. We are currently at the Detailed Project Report (DPR) stage.


Our broader vision includes developing water routes from Mazgaon to Raigad, Ratnagiri and Sindhudurg. This will drastically cut travel times to these coastal districts, which currently take hours to reach by road. A new jetty is being developed at Radio Club in Colaba, and a marina is coming up in Navi Mumbai. We are also taking proactive steps to ensure that none of these projects are delayed due to environmental clearance hurdles. I am confident that within the next six months, you will begin to see significant changes on the ground.

 

What is the progress of the dry ports?

We are in talks with certain companies from the Netherlands. I travelled to the Netherlands in the first week of April. They are considered the best in the world when it comes to dry port infrastructure. During my visit, I observed their systems and interacted with their experts. Their models are highly efficient, and we believe their experience can greatly benefit Maharashtra. Very soon, we will be bringing in their expertise to help us start developing dry ports in our state. This will strengthen our logistics backbone, especially for cargo movement inland, and position Maharashtra as a leader in multimodal transport infrastructure.


You have been a very aggressive leader. What was the first change you adopted after becoming the minister?

The biggest change was in my approach to time management and patience. There is now a huge responsibility on my shoulders because I am no longer just an MLA; I am a minister of the state. There can be no compromise on aggression, but it must be channelled in the right direction which is towards the development of Maharashtra and the protection of Hindutva. With power comes the need for discipline and purpose. When you are in government, people expect results. That expectation keeps me grounded and focused. I have spent several years in the opposition, and that has taught me the importance of using this opportunity well. I want to work for the people 24/7. I want to deliver concrete results that reflect the trust they have placed in me.

 

Your father (Narayan Rane) is known for his studious administration. What did you learn from him?

One of the key things I have learnt from him is the importance of decisive decision-making. When you are confident about a subject, when you have done your homework and understand the implications, you must not hesitate. Indecisiveness leads to delays, and delays cost public money. I have learnt from him that if you’re well read and prepared, then you owe it to the people to make the right decisions without wasting time. I’m confident enough to say that by this time next year, my department will be financially self-sustaining. We will not be dependent on government funds. In fact, we will not need to request additional allocations from the Chief Minister. That is the level of efficiency and revenue generation I am aiming for.

 

Since you are the minister for fisheries, what is your favourite fish dish?

I come from the coastal belt of Maharashtra, where seafood is a part of daily life. Frankly, I enjoy all types of seafood. Put any variety of fish on my plate and I will happily eat it. I don’t want to do injustice to any fish by naming a favourite.

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