Monday, June 20, 2016

Who will replace Rajan?

Who will replace Rajan?

The RBI Governor Shri Raghuram Rajan opted for academics, therefore, names of his replacement are in news. As an outspoken personality, he has explained, what he did for Indian economy during his tenure as RBI Governor. It is for the economists to review, whether he went for no options answers or selected the best/suitable from the available alternatives. However, with the decrease of exports and imports both the overall business went down, but as the import was decreased more than the exports, it has given plus point to the country. With the fall of demands all over the world, the reduction in crude prices has saved us more than any other decisions. NPA is rising up and some of the nationalised banks are in trouble due to funding high value loans like Malya. However, the interest rates of the banks are always in debates. The borrowers want loans at low interest rates and the depositors expect more returns on their investments. 

Many of the developed countries have less interest rates (1 or 2%) for both the groups (with nearly zero inflation), the consumption model of economy is booming in those countries (excluding the recession period). Now at home, when inflation is under control, people demand borrowing at low interest rates. If that is slashed down, the depositors interest income will go down. Will that affect the quality of their life, as many of them are retired or near to retired age people?

Somebody commented, 
"The new RBI Governor should reduce interest rates to less than 2 per cent. When inflation is almost Zero , there is no reason to have such high interest rates. The lazy middle class and Senior Citizens have been getting too much Free Money on their Savings. While the productive , risk-taking entrepreneurial class (who are the real engines of the economy) is being penalized with high interest rates."

Savings is a major source of our economic investments. IPOs are disappeared, therefore either FDI or the Domestic Savings to take the lead.

What is your take on this? The lazy v/s productive!!!

20 June 2016


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