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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.)

Why India Should Welcome Global Talent Amid H-1B Restrictions

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When U.S. President Donald Trump announced a $100,000 H-1B visa fee, many viewed it as a setback for Indian IT companies and professionals who have long relied on America’s tech market. For decades, the H-1B visa was considered a gateway for Indian engineers, coders, and innovators to build careers in Silicon Valley. But today, the same restriction that appears to close one door has the potential to open another—directly in India’s favor.


A wake-up call

The rising barriers to Indian professionals in the United States are not just a diplomatic or economic challenge; they are a historic opportunity for India. Instead of seeing its brightest minds migrate abroad, India can now position itself as the preferred global destination for high-end technology and innovation jobs. By creating policies and infrastructure to absorb this redirected talent pool, India can reverse decades of brain drain and usher in a new era of brain gain.


World’s fastest-growing economy

India is already the world’s fastest-growing major economy, projected to grow at 6.8 per cent in 2025 (IMF). It has become the fifth-largest economy globally, and by 2027 is expected to surpass both Japan and Germany. For top job seekers priced out of the American market by H-1B costs, India offers the next best thing—if not something better.


This is not the India of two decades ago that primarily exported software talent. Today, it is a frontline player in AI, semiconductors, fintech, and advanced manufacturing. With 850+ million internet users, India is building the largest digital marketplace outside China, creating unmatched opportunities for innovators and professionals.


Perfect destination for global talent

1. Unmatched talent ecosystem

India produces 1.5 million engineers annually (AICTE), and by 2030 will have the largest STEM talent pool worldwide (NASSCOM). The return of global professionals will further enrich this ecosystem, adding skills honed in global markets.


2. Thriving start-up economy

With 100,000+ registered start-ups and more than 110 unicorns, India is already the third-largest start-up ecosystem in the world (after the U.S. and China). In 2022–23 alone, Indian start-ups raised $25+ billion in venture funding, reflecting investor confidence. For job seekers, this means not only employment but the chance to build global giants from Bengaluru or Hyderabad.


3. Government push on advanced sectors

The government’s $26 billion Production Linked Incentive (PLI) scheme is catalyzing growth in electronics, EVs, and green energy. A $10 billion semiconductor incentive program has already attracted commitments from Micron, Vedanta, and Foxconn. These sectors need exactly the kind of highly skilled professionals who once sought H-1B visas.


4. Growing global investment

Global tech giants—Google, Microsoft, Amazon, Apple, and Meta—are expanding R&D centers and cloud infrastructure in India. The country’s data center market is expected to double to $10 billion by 2027, creating high-paying, high-tech roles.


5. Cost advantage with quality of life

Salaries for software engineers in India’s top metros range between $25,000–$40,000 annually, but with living costs that are 60–70 per cent lower than Silicon Valley. A Deloitte survey found 65 per cent of Indian professionals abroad would consider returning if opportunities matched their expertise—a trend that can now accelerate.


Strategic national mission

Instead of lamenting lost opportunities in the U.S., India must act strategically. Universities, industry bodies, and the government can collaborate to:

  • Create special recruitment platforms for returning professionals.

  • Offer incentives and startup incubation for those who want to launch companies in India.

  • Establish 'reverse-H-1B' programs that match tech talent with roles in semiconductors, AI, defense, and smart cities.


By doing so, India won’t just absorb talent—it will amplify it into engines of growth.


The bigger picture

Every major economy faces inflection points. For India, this moment—triggered by a U.S. policy shift—could redefine its global trajectory. If harnessed properly, the H-1B visa fee barrier could accelerate India’s rise as the world’s innovation hub, attracting not just returning Indians, but also global professionals who see India as the next Silicon Valley of the East.


What looks like a setback for U.S. IT giants may well be the turning point for India’s knowledge economy. With the right moves, India can prove that when one door closes abroad, another opens much wider at home.


(The writer is a BJP official based in Thane. Views personal.)

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