Interest on Savings

Interest Rate on Savings
This refers to your edit on Not One More Committee ( Et dt,24/04/10).It has been the experience that committees after committees get appointed to study certain issues before any final decision is taken and implemented. As rightly pointed out three committees have already studied and come out with their recommendations more or less on the same lines to replace administered rates of interest with market linked rates on small savings and there is delay on the part of the Government in coming out with its decision. This delay does not augur well either for the economy or for the savers.
The inflation keeps on going up and there is no talk of real interest rate these days. Even the market rates both on savings and lendings do not reflect the inflation. Unfortunately there is no central rate of interest or bench mark rate of interest in our system on which other rates revolve around. It is time to free rates from the clutches of administratin and see that all savings rates are linked to market rates for the benefit of savers and to give a semblence of continuity of reforms. There should be real rate of interest to induce savings. Savings will also contribute to bing down demand driven inflation.No economy can prosper without an inducement for real savings.

Dr.T.V.Gopalakrishnan