Category Archives: Inflation

Souring Dreams of Indian Middle Class

Two headlines in today’s Economic times attracted my attention and also caused a bit of turmoil.

LIC’s Large Exposure to PSUs Raises Fears on Returns Front

Fees at Some IIMs Triple in 5 Yrs; up 15% at IIM-B This Yr

First one was about Govt.’s dictate to the state run life insurance company to buy public sector undertakings’ stocks and consequently them losing in value.  This incident brings back the memories of UTI fiasco in 2001.  Barely a decade later, it appears that Govt.’s short-sightedness and financial exigencies are pushing the insurance behemoth in to the same road.  The insurer may be too big to fail but loss of confidence would hurt the organisation and the economy greatly.  With court dismissing PIL on LIC’s investment practices, you and me, either as policy holders or as advisors can do little about such decisions other than feeling the despair.  People who think of ‘investing’ in such schemes because of Govt. guarantee (in spite the returns being low) should pause and ponder.

Another headline is about fee of some IIMs tripling in 5 years (from Rs.4 Lakhs to Rs.1.5 Lakhs).  Another Indian Middle Class dream is biting the dust!  If this can happen in the case of an institution set up by Govt. of India, there will be no control over other institutions offering similar courses and education.  The report says around 25% of students would get fee waiver?  The rest have to bear the burden.  If you are a parent aspiring that your children should aim for IIMs please take note of these numbers.  Inflation is real and it can hurt you.