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This refers to “Cheap loans: By how much can you cut rates, FinMin asks banks” ( Business Line , October 9). Asking commercial banks to disclose information regarding the possibility of cut in lending rates, has been viewed from two angles can be seen asa stimulus measure to expand the demand for consumer durable goods in the short run.
It also seems like a poll campaign in disguise. Whatever the motive, it will ultimately nullify the constructive measures taken by the RBI to contain inflation.
How can a bank lend money to the extent of 10 times its deposits just to get one-tenth of it as additional capital from the Centre?
S. Lakshminarayanan
Cuddalore
Tackle price rise
With reference to “Oil PSUs squeezed mercilessly” ( Business Line , October 9), the diesel rate should be gradually increased to reduce the burden of subsidy.
At the same time, whenever the international crude price decreases, the ministry should not be in a hurry to decrease petrol price.
It should review fuel prices every quarter and increases should be on a fortnightly basis. This way, excess money can be used to offset under-recoveries.
Studies show it has little effect on overall inflation.
V. V. Rao
Valid argument
Some of the points made in “Textiles — the war within” ( Business Line , October 9) are quite valid. The government acted hastily to withdraw FMS benefits.
The flip-flop in policies shows India in poor light. The spinning industry should be promoted to bring down CAD.
Sam Shalgaonkar
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