Question: I am returning to India after my retirement later this year. I have been advised to invest my savings in mutual funds. However, given the volatility of the equity market, I have significant concerns about doing so. Are there any safer categories of mutual funds where I can initially invest?
Answer: First-time investors are often recommended to consider investing in an aggressive hybrid equity fund. This type of fund combines two asset classes, with approximately 65% of the total assets invested in equity and equity-related instruments, and the remaining in debt securities and money market instruments. This makes the fund less volatile compared to a pure equity fund. One advantage of the aggressive hybrid equity fund is the automatic asset allocation feature. This means that if the equity allocation exceeds 65%, the fund manager will reduce the equity allocation and shift to debt instruments. The aggressive hybrid fund has been utilized by over 5.5 million investors, with total assets under management amounting to Rs2.19 trillion as of 31st July, 2024. Most fund managers invest only in large-cap stocks, which are well-established companies with a proven track record of growth. Therefore, many investors with a five-year horizon stagger their investments using a systematic investment plan, ensuring a reasonable return with minimal risk.
Question: While credit extended by banks and financial institutions has increased systematically, agriculturists and micro enterprises in India are still struggling to access funds to sustain their growth. Is there any possibility that vulnerable sections will receive their fair share of credit?
Answer: The Reserve Bank of India is taking proactive steps to ensure adequate credit flow to agriculturists and small, medium, and micro enterprises. A new technology platform called Unified Lending Interface (ULI) is being implemented to facilitate the flow of credit and provide loans to farmers and small entrepreneurs. The digitization of banking services will enable seamless credit flow. ULI will enable consent-based digital information flow. Land records are being updated and will be available to bankers and other lenders, speeding up credit appraisal for rural borrowers and small businesses. A standardized plug-and-play system has been established to reduce the need for extensive documentation from borrowers. This is specifically designed to address the credit demand in the agricultural sector by digitizing access to data. Tools of artificial intelligence are being used to ensure the authenticity of data collected and to prevent any bias. Additionally, data privacy will be protected to prevent misuse. Therefore, it is anticipated that in the coming months, there will be a robust growth in credit flowing to agriculturists and small and medium enterprises.
Question: The Government had announced initiatives for quantum computing. I am curious to know if any positive steps have been taken in this regard.
Answer: A National Quantum Mission has recently been established, which has begun interacting with 14 startups in India. It has been decided to start disbursing grants to eligible startups in the quantum space within the next three months. These grants will range from Rs20 million to Rs250 million. The reason for this is that the startups require funds due to the substantial investments needed, given the capital-intensive nature of the technology. Venture capital companies are currently not supporting new ventures due to the large investments involved. The NQM has finalized four quantum thematic hubs. The themes are quantum computation, quantum communication, quantum sensing and metrology, and quantum materials and devices. These hubs will be set up in academic and national research and development institutes. A coordination center is being established at IIT Kanpur, which will evaluate the progress of projects every six months. The NQM is encouraged by the fact that the startups it plans to fund have already undertaken research in developing products in the fields of quantum key distribution and post-quantum cryptography.
HP Ranina is a practicing lawyer, specializing in corporate and tax laws of India.
