This refers to Ashoka Mody and Michael Walton’s article “The inflation elixir” (January 17). The recent shift in the government’s policy in the name of “second dose of reforms” has hastened the process of transfer of resources from the poor to the rich. Political parties with varying interests that form the ruling United Progressive Alliance government make it expedient for the BPL (businessmen-politician-lawyer) combined to get “majority” support in legislature for different conflicting initiatives, at different times, using the carrot and the stick approach. In this light, the impact of rising inflation and dwindling return on savings has not been properly discussed. The plight of those who retired in the 1990s and had anticipated a return of 12 per cent per annum on their retirement savings could be a case study for the present government that is pushing a New Pension System (NPS). Those retirees are faced with a one-third reduction in the real income and manifold increase in household expenditure and expenses on health care. Taking a cue from this experience, wage-earners should start saving a lot more than what the government tells them to (10 per cent of wages with equal contribution from employer under NPS).
M G Warrier Thiruvananthapuram
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