Arun Jaitley Questions high Interest rates on Savings – He added, the private sector can play a pivotal role in bridging country’s infrastructure deficit.
Finance Minister Arun Jaitley questioned the high interest rates on savings that translate into higher cost of lending and sluggishness in the economy with private investment yet to show signs of pickup. India,he said, has the “peculiar” characteristics of having “quite a high” percentage of domestic savings.
“Now, whether domestic savings are only to be used by such instruments which give you a higher return and create an interest regime which is extremely costly and makes the economy sluggish, or higher returns are to be got from such instruments as funds, bonds, shares,” he said at a function to unveil a commemorative postage stamp to mark 140 years of BSE.
He added, the private sector can play a pivotal role in bridging country’s infrastructure deficit, even as he wondered whether high interest rates on savings were desirable as these result in elevated lending costs. He said India would need massive investments over next few years and such investment was to come from the private sector and through public private partnerships (PPP).
The FM said the Indian economy will need a lot of investment for a reasonably long period to bridge the infrastructure and industrialisation deficit that has existed for decades.
“And the starting point of all activity has to be investment, it has to be resource-raising, it has to be important companies in the private sector and sometimes PPP, which will ensure this deficit is met,” he said.
“Last few years have seen India grow well, essentially grow well on the strength of enhanced public investment (and) FDI. The best of private sector in that development process is yet to be seen,” he said.
However a senior citizen in anonymous said, “you can not expect ordinary citizens, and the senior citizens to risk their meagre funds to the wide fluctuations of the market. Senior retired citizens essentially live from the interest earned from their lifelong savings.”