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.