CORONOMICS CURE

Corona virus is a deadly killer.  But it is proving more deadly for the world economy.  Rapidly spreading Corona is engulfing the entire world, leading to shattering of stock markets, travel, tourism and trade.  Schools and colleges are being closed.  India's top brand IPL-2020 is postponed.  Even the Japan Olympics scheduled for July-Aug 2020 is under serious threat! Already limping world economy is heading towards deep recession.  Nobody knows how long it may stretch?

Crumbling crude oil price has brought more anxiety than cheers.  Gains of lower oil prices may be more than wiped out for India, by its poorly performing economy. US dollar has gone up to IRs.74.

Yes Bank crisis may not have anything to do with Corona. It's a case of reckless lending by a notorious management with vested interests.  Burden of bailing out always falls on the Government which has lost no time in choosing SBI for the rescue act.  Saner sense seems to be prevailing, as private bodies like HDFC, ICICI too are being roped in for bail-out process.  But the role played by the regulator RBI and bank auditors which could not prevent the decay also must come under scanner! It's time RBI comes out with a rating of safety of banks from depositors point of view.  Customers certainly have a right to know!

With the looming recession, more NPAs are bound to confront all banks.  Less said the better about NBFCs!  IL & FS and DHFL may only be a tip of the ice-berg.  Telcom giants like Airtel and Vodafone too are asking for their pound of flesh.  Will Government be able to pull out all these white elephants?  It may take longer time to contain the impact of Coronomics than Corona itself!

We the people are more concerned about safeguarding our investments.  Especially the senior citizens, most of whom depend on returns from investments are really worried.  They have already fulfilled all their family responsibilities.  Still they have to look after themselves.  Health care is always a matter of concern.  Even the monthly expenses are ever increasing.  Food expenses may be a small fraction, but the cost of services and repairs is asking for the bigger piece of the pie! Stock market uncertainty will certainly loom longer this time. They have to tread with caution although they need not exit from the market. Where do they go from here?

While the bank deposit rates have dropped down to below 6%, National Small Savings Schemes (administered through Post Offices and Banks) are still attractive.  The flag-ship scheme among them is the 'Senior Citizens Savings Scheme (SCSS)' which carries 8.6% (Interest payable quarterly) with an investment cap of Rs.15 lakhs per head!  Other schemes too are quite attractive.  Post Office Fixed deposits of 1, 2, 3 and 5 years (Max 7.7%, no investment cap) carry much better rates when compared to banks.  

LIC's Pradhan Mantri Vaya Vandana Yojana is one more attractive 10 year scheme with an interest rate of 8% (payable montly, with return of corpus at the end).  Interest is payable on monthly basis.  But the investment cap per person is 15 lakhs.

LIC's Jeevan Shanthi which assures 5.6% (payable monthly, with return of corpus at the end) return till the end of lives of husband and wife was looked down so far as low yielding.  But with bank deposit rates dropping below 6%, suddenly Jeevan Shanthi has caught attention of even experts.  Moreover there is no cap on investments.  Ten years from now, who knows?  The bank deposit rates may fall much below 5.6%!

One has to hurry-up as these interest rates may revised downwards after 31st March 2020 or even earlier!

The old adage says 'don't keep all your eggs in a single basket'.  Also the master investment guideline says 'higher the age, lower the risk'.  'Not taking a risk is also a risk' is one more prescription and it may not be inapplicable for seniors too!  Therefore we, especially seniors, have to work out a balanced healthy portfolio out of our hard earned funds, so that risk and returns are optimized. We don't know how to conquer Corona, but certainly we can find a cure for the ills of Coronomics!

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P.S.: I had a family health cover of 10 lakhs till 31-12-2019 under the Group policy of my employer.  I had applied for availing continued health cover even after my relief from the job, but there was no response from the insurer.  A fortnight ago, I complained to IRDAI and because of their intervention, the Insurer has now come forward to give me the continued cover.  

Also seniors may forget renewing the health cover in time.  Losing health cover at advanced age is certainly dangerous.  Therefore I suggest that we all individually and collectively will have to appeal to IRDAI to come out with a single premium health policy which assures continuous health cover till death.