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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.)

The Forgotten Right: Why India Must Fight for Universal Healthcare

India’s healthcare system should serve every citizen equally and not just those who can pay.

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The death of Tanisha Bhise, a young mother, at the Deenanath Mangeshkar Hospital in Pune earlier this month prompted angry op-eds about medical negligence, fiery debates about the regulation of private hospitals and the usual deluge of hashtags demanding accountability. Yet the most urgent question, which is the collapse of government-provided healthcare and the need for universal, free medical services has barely been whispered.


India’s Constitution promises healthcare as a right. But in practice, successive governments have abdicated much of this responsibility, leaving the private sector and charitable institutions to fill the breach. Today, 80 percent of healthcare services are delivered by private or charitable providers. Only 20 percent are provided by the state. In a country of 1.4 billion people, such a balance is dangerous. The burden of public health cannot be offloaded onto entities designed neither to serve the poorest nor to guarantee equitable access.


If India is serious about improving healthcare outcomes and preventing future tragedies, it must confront the systemic collapse of its public health infrastructure.


Start with maternal care. In many government hospitals, women who suffer postpartum haemorrhage find that even basic medicines like carbocistin used to stop bleeding, are unavailable. Despite years of maternal deaths and warnings from public-health experts, successive health ministers have failed to ensure the supply of such life-saving drugs. The shortage of trained specialists is even more glaring. Ideally, a government hospital providing maternal care should have at least four specialists: a gynaecologist, an anaesthesiologist, a radiologist and a paediatrician. Most district hospitals and sub-district health centres fall woefully short of these minimum standards.


The result is a grim and predictable chain of events. Women are shuttled from one government facility to another as complications arise, wasting the critical ‘golden hours’ when medical intervention could save both mother and child. By the time they reach a private hospital or a better-equipped medical college, it is often too late.


India’s infant care system fares no better. Neonatal intensive care units and paediatricians are rare in government hospitals. Even medical colleges, which generally offer higher standards of care, are plagued by overwhelming patient loads, manpower shortages and bed unavailability. The mass deaths at government hospitals in Nanded and Thane in recent months - 24 dead in 24 hours at one, 18 dead in 24 hours at the other - should have triggered urgent reforms. Instead, they have been quietly forgotten.


The key question is not why patients choose private hospitals but why the government has made them the only viable option for so many. Public outrage about private hospital fees and standards, though understandable, misses the point. In a well-functioning system, private hospitals should serve as a supplement to, not a substitute for, state healthcare.


If India wishes to move towards universal healthcare, it must start with maternal and child health, and then expand the model to cover broader services. Equity, and not merely access, must be at the heart of the system. Today, healthcare quality is stratified by income: the ultra-rich, the middle class and the poor receive vastly different levels of care. Universal healthcare, properly executed, would guarantee the same quality of care for all citizens.


Achieving this will require radical changes to both policy and spending priorities. At present, 60 percent of healthcare spending in Maharashtra comes directly out of patients’ pockets. The goal must be to reduce this to zero. Yet the 2024-25 state budget allocated just Rs. 3,827 crore to public health, a paltry 4 percent of total spending. Even this modest sum was not targeted based on epidemiological priorities. Manpower shortages, medicine procurement failures and crumbling infrastructure have persisted for decades without serious attempts at resolution.


Solutions exist. Tamil Nadu’s medicine procurement model has been studied repeatedly, yet remains unimplemented elsewhere. Recruitment of BAMS doctors and BSc nursing graduates as community health officers has expanded access, but delays in salary payments and a lack of basic equipment render many of them ineffective. Cases of corruption in medicine procurement continue to surface, further eroding trust in government health services.


Ultimately, the state cannot confine itself to regulating private hospitals while neglecting its own obligations. It must invest in building a robust, high-quality public healthcare system that matches the private sector. COVID-19 brutally exposed the cost of India’s public health collapse. Families were ruined financially. Deaths surged not only because of the virus, but because of a system unprepared to deal with the scale of the crisis.


The lessons of the pandemic seem already forgotten. Despite widespread calls for reform, there has been little serious movement towards establishing a system of free, universal healthcare. Globally, 40% of countries provide some form of universal healthcare. Britain’s National Health Service (NHS) has survived for over 80 years. Cuba, Thailand, Canada and Japan have all developed models that ensure healthcare is treated as a public good, not a market commodity. India need not copy these systems wholesale but must choose a path and commit to it with seriousness and urgency.


Healthcare and education are primary responsibilities of the state. Yet because they yield scant electoral dividends, they are routinely neglected. If past history is any guide, then the inquiries ordered and reforms suggested in wake of Tanisha Bhise’s death will soon be forgotten. The Lentin Commission’s recommendations after hospital deaths in 1988 still gather dust.


Universal healthcare is not charity. It is not largesse. It is not even policy. It is justice. And it is long overdue.


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