Impact of Economic Policies on Personal Finance: Adapting to Changes

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When the New Economic Policy was implemented in 1991, it significantly changed the Indian economy. With the reduction of import taxes, opening up of the private sector, and devaluation of the Indian rupee, the policy aimed to stimulate exports and boost economic growth.

 

How Economic Reforms Have Shaped Personal Finance

The economic reforms in 1991 or any other regular reforms have a far-reaching impact on personal finance. Here, we will evaluate the impacts of economic policies on the personal finances of people taking it as a backdrop.

 

1. Increased Access to Global Markets:

The New Economic Policy opened up India's economy to international trade. This resulted in increased competition, which led to more choices for consumers and greater efficiency in sectors like banking. As a result, individuals now have access to a wider range of financial products and services.

For example, individuals can now invest in unit-linked insurance plans (ULIPs), which offer combined life insurance coverage and investment opportunities. By diversifying their portfolios with ULIPs, individuals can benefit from market fluctuations while securing their family's financial future.

 

2. Improved Export Opportunities:

The economic reforms implemented post-1992 have made India more connected with the global economy. This has resulted in a significant increase in overall exports of goods and services.

As India's reputation grew in the international marketplace, more foreign visitors started coming to India. This increase in tourism has created new business opportunities and boosted local economies.

 

3. Job Creation and Increased Income:

While economic reforms have accelerated development, job creation has been a challenge. Liberalisation in the organised manufacturing sector has not translated into significant job opportunities due to strict labour laws.

However, the reforms have also led to increased income levels for certain professions such as scientists, technologists, doctors, nurses, teachers, and management professionals.

 

4. Unequal Distribution of Economic Freedom:

The reforms have primarily affected the formal economy, neglecting sectors like agriculture, the urban informal sector, and forest-dependent populations. This has resulted in uneven growth and income distribution.

Furthermore, the health and education sectors have been neglected, leading to low levels of education and health indicators.

 

Adapting to Economic Changes: The Role of Insurance

People need to adapt to the economic changes to keep their personal finance in order.

 

1. Protecting Your Family's Future with Rs 1 Crore Term Insurance:

With economic reforms come uncertainties, making it crucial to secure your family's financial future. One effective way to do this is by opting for a Rs 1 crore term insurance plan.

A Rs 1 crore term insurance plan provides a high sum assured at an affordable premium. In the unfortunate event of your demise during the policy term, your family will receive a lump sum payout of ?1 crore, ensuring their financial stability.

 

2. Calculating Your Term Insurance Needs:

To determine the right coverage amount for your term insurance policy, you can use a term insurance calculator. By inputting details such as your age, income, liabilities, and desired sum, the calculator will provide an estimate of the premium you need to pay.

For example, let's consider a 30-year-old individual with an annual income of ?10 lakh and existing liabilities amounting to ?50 lakh. Using a term insurance calculator, they find that a Rs 1 crore term insurance plan is suitable for their needs.

 

Real-Life Examples: Impact of Economic Policies on Personal Finance

 

Example 1: Financial Planning for Retirement

Mr Sharma had been working in a public sector bank for over three decades when economic reforms led to changes in the banking sector. He realised that his retirement savings needed to be managed more strategically due to increased market volatility.

By consulting with a financial advisor and considering different investment options such as ULIPs and mutual funds, Mr Sharma was able to create a well-diversified retirement portfolio. This allowed him to adapt to the changing economic landscape and secure a comfortable retirement.

 

Example 2: Protection Against Inflation and Economic Uncertainty

Mrs Kapoor, a working professional in the IT sector, witnessed rising inflation and economic uncertainties due to global factors impacting the Indian economy. She wanted to safeguard her family's financial future against such uncertainties.

After researching different insurance options, Mrs Kapoor opted for a Rs 1 crore term insurance plan along with an inflation-protected investment plan. This combination ensured that her family would be financially secure in case of any unfortunate events while also protecting against inflation.

 

Conclusion

As the Indian economy undergoes constant changes brought about by economic policies, it is crucial to adapt your financial plans accordingly. By understanding the impact of economic reforms on personal finance and making informed decisions, you can ensure your family's financial security.

Consider exploring the benefits of a Rs 1 crore term insurance plan that offers substantial coverage at an affordable premium. Use a reliable term insurance calculator to determine the right sum assured based on your specific needs and circumstances.

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