Interest rate dilemma
This refers to the news report ‘Banks’ interest rates need to be far more affordable, says FM’ (dated November 19). The Finance Minister’s statement is timely. When the repo rate rises, lending rates are the first to be impacted. Banks are typically slow to adjust deposit rates in response to rate changes, and they apply a floating rate system for lending but often maintain fixed rates for deposits. This results in a larger Net Interest Margin (NIM), boosting banks’ profitability.
Another critical issue affecting inflation management is the volatility in food prices, especially perishables.
Although some argue that such items should be excluded from the inflation index, the cyclical spikes in these prices, which drive up food inflation, suggest they should be included in the Consumer Price Index (CPI).
Srinivasan Velamur
Chennai
RBI Governor’s tenure
This refers to ‘Government may give another extension to RBI Governor Shaktikanta Das’ (HBL, November 19). If it happens, Das may become longest-serving RBI Governor since Benegal Rama Rau. Das’s extension will hardly be surprising as he is usually on the same page with the Centre and has also successfully reined in inflation.
Perhaps RBI needs him more than anything else.
SK Gupta
New Delhi
Ending freebie culture
It is with reference to the article ‘The scourge of freebies’ (November 19).
In Maharashtra, the BJP-led Mahayuti has been forced to promise higher cash dole after big guarantees by the Maha Vikas Aghadi. The cost of these promises is staggering.
However these promises would drain the state coffers leading and curtail funds for infrastructure and development projects.
The ECI and Supreme Court must step in to end the freebie menace.
P Victor Selvaraj
Palayamkottai (TN)