Mumbai. Union Finance Minister Nirmala Sitharaman said on Monday that bank interest rates are extremely stressful for some people, and steps need to be taken to make them cheaper. Amid widespread concerns about the possibility of a slowdown in economic growth, the Finance Minister assured that the government is fully aware of the domestic and global challenges. He said that there is no need to worry unnecessarily.
He said that at this time there is a need to promote industries in India and invest in new plants and in such a situation, reducing loan rates can help in realizing the aspiration of developed India. Sitharaman said, “The important thing is that when you look at the growth needs of India, and the opinion coming from many quarters is that the cost of borrowing is really going to increase the pressure. At a time when we want industries to grow rapidly and capacity to be built, bank interest rates should be much cheaper.” At the annual business and economic conference of State Bank of India (SBI), he asked banks to focus on their core work of lending.
The Finance Minister said that mis-selling of insurance products also indirectly increases the cost of borrowing for an individual or institution. Union Commerce Minister Piyush Goyal last week had urged the Reserve Bank of India (RBI) to cut interest rates to boost economic growth.
It is noteworthy that most of the commercial banks directly or indirectly decide their rates on the basis of RBI interest rates.
Sitharaman said that at present inflation is increasing due to a group of three or four perishable items and the remaining items are at three or four percent level.
The Finance Minister also made it clear that she did not want to get into the debate on whether food prices should be considered while preparing inflation indices or whether the Monetary Policy Committee of the RBI should decide on rates. He said that inflation is a complex issue, which affects the common man. He said that the government is working on supply side measures including edible oils and pulses.
Sitharaman, however, added that India is grappling with cyclical supply issues and the government’s efforts are mainly focused on improving storage facilities to reduce volatility. Amid widespread concerns over fears of a slowdown in growth, Sitharaman assured that the government is fully aware of the domestic and global challenges and said there is no need to worry unnecessarily.
He said that many high frequency indicators are pointing towards strong activities on the ground. The Finance Minister said that some people believe that the government’s fiscal consolidation is hurting economic activity, but he denied any such thing and said that growth is the priority of the government.