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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.)

Marathwada's Unfulfilled Promise of Progress

On the occasion of Marathwada Liberation Day, the region’s struggle for progress remains an unfinished chapter of India’s development story.

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Each year on September 17, Maharashtra marks the Marathwada Mukti Sangram Din or Marathwada Liberation Struggle Day which stands as a solemn reminder of the region’s long and painful battle against the Nizam of Hyderabad’s rule. When India won independence in 1947, Hyderabad remained a princely state under the autocratic rule of the Nizam, who was reluctant to accede to the Indian Union. It was not until late 1948, when the Indian Army launched ‘Operation Polo’ that Hyderabad was annexed, ending the Nizam’s sovereignty and liberating Marathwada.


For the people of Marathwada, liberation was a long struggle against feudal oppression, systemic inequality, and neglect. Under the Nizam, Marathwada’s economy was structured around exploitative landholding patterns, where vast tracts were controlled by a few jagirdars, while the majority remained impoverished peasants. Forced labour, high taxation and poor infrastructure were commonplace, and basic services like education and healthcare were scarce. The region’s development was stifled by a lack of public investment, fuelling resentment and laying the groundwork for mass mobilisations during the liberation struggle.


Even after integration with India, the arc of progress remained elusive. Unlike western Maharashtra, which benefitted from the Green Revolution and industrial investments, Marathwada remained primarily agrarian, plagued by low agricultural productivity, erratic rainfall, and inadequate irrigation facilities. Early hopes that independence would usher in equitable development were quickly dashed as political attention and capital investment bypassed the region. Key industries were concentrated elsewhere, and bureaucratic inefficiencies compounded the sense of abandonment.


Today, the story continues in the form of an ongoing exodus. More than 40 percent of students in Pune hail from Marathwada, driven by the belief that “progress demands education.” In the face of limited local opportunities, young men and women leave their villages to take on urban hardship. Many have succeeded, rising to respectable positions in business, academia and public administration, carrying with them the pride of their region.


Yet their departure underscores a systemic failure. Education, a supposed vehicle for social mobility, is itself in short supply in Marathwada. Reputed universities and technical institutes are few, while the existing ones struggle to maintain quality. Students often journey to Pune or Mumbai merely to secure a basic degree.


Employment opportunities are even scarcer. Despite abundant land, Marathwada lacks industrial hubs and meaningful investment. The economy remains dependent on agriculture, vulnerable to droughts and poor irrigation infrastructure. The absence of industrialisation is not incidental but the result of policy neglect and political inertia.


Healthcare, too, remains grossly inadequate. Local hospitals are ill-equipped, and serious medical cases often require trips to cities such as Pune or Aurangabad. The health infrastructure gap compounds the sense of abandonment and fuels further migration.


In this context, many young people channel their energies into activism, hoping to draw attention to systemic injustices. Yet activism, while vital, offers no clear path toward sustainable livelihoods. Without real structural change, it risks becoming symbolic protest rather than a solution.


Worryingly, forecasts suggest that up to 70 percent of Marathwada’s population could relocate to urban centres within the next decade. Far from exaggerated, this projection reflects a disturbing trajectory. Villages are already emptying, and local economies eroding, threatening the very cultural fabric of the region.


This raises uncomfortable questions about governance and policy priorities. Are political leaders content with symbolic gestures? Is the public resigned to a status quo that consigns Marathwada to perpetual underdevelopment? Or do they cling to the hollow hope that “things will improve someday?” What Marathwada requires is not nostalgia or rhetoric but targeted policy intervention. The state and central governments must invest in quality educational institutions, modern healthcare infrastructure, and industrial development tailored to local needs. Incentivising industry in Marathwada through tax breaks or special economic zones could stem the flow of migrants.


On this Liberation Struggle Day, the challenge is clear. True freedom is not merely the end of colonial oppression; it is the realisation of equitable development and opportunity. The unfinished business of integrating Marathwada into India’s progress story cannot be allowed to linger as a national shame.


Unless addressed, the pain of a migrating Marathwada and the prospect of desolate villages will not remain a distant threat but a grim reality of tomorrow.

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

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