Dr Rajan has done the right thing perhaps to give a boost to the economic growth which is unfortunately remaining stagnat for more reasons other than the interest rate. But this lobby of industrialists, market operators and the politicians misses the long term sustainability of the economic growth and inflation which was being nurtured by Dr Rajan all along with his brilliance,professionalism and concern for the economy and the masses. With this recent measure of cutting the policy rates beyond the demand and market expectations, he has virtually killed the depositors with whose money and support the banking system and the economy survives. The argument that the real rate of return has improved because of fall in inflation is only on paper and the common man finds it difficult to make both ends meet because of varities of taxes starting from service tax practically on all items, sales tax, income tax etc and above all corruption and other living expenses like ever increasing retail prices of essential items like rice dal oil vegetables.Fruits the common man is only able to see and come without having it is the reality. Medical expenses are beyond his even survival thoughts. Every policy ignores the reality of its real impact on the common man and the present rate cut can at best reduce the housing loan by a few basis points. What he wants is an affordable house which unfortunately is not there as the real esate Mafia and builders mafia are very strong and they keep the prices very high, unaffordable and beyond the reach of an average common man by any stretch of imagination with or without the support of banks and black money. This policy favours the rich a lot whether the economy grows or not. The transmission of this rate cut may not materialise as the banking system has never done that anytime in the past.
Dr T V Gopalakrishnan
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