Bank rates

| Updated on August 22, 2019

This refers to the editorial ‘Speeding up’ (August 22). Notwithstanding the implementation of various interest rate structures, the passing of the changes in the repo rate is still partial and belated, adversely affecting the advancement of the economy. The threat of the twin balance-sheet problem is hanging over the banks and the impending pressure of diminishing profitability is leading to the hesitance of lenders to cut the deposit and lending rates in sync with the changes in the repo rate.

The instant application of a change in policy rate is imperative to control inflation and induce investments. Lowering the cost of investment is vital to incentivise the investors. However, the raising of resources without a better deposit rate is difficult and, therefore, it is essential to find a new structure for determining the rate of interest, which will positively impact both deposits and advances of the bank.

The changes in the monetary policy rate must reflect in the rates of interest applied or charged by financial intermediaries to ensure that the repo rate as a monetary tool is effective in accelerating economic activities. The banking regulator must look for measures to push the lenders to link their rate of interest with the repo rate.

VSK Pillai


Priority sectors

This is in reference to The wait for a plan to revive the economy’ (August 22). For India to progress and compete with other developed nations, we must do away with the ‘freebie’ culture and seriously give a thought to investment in infrastructure, health, education and labour-intensive industries.

India is a young country, with more than 65 per cent of the population below the age of 35. Sustaining economic growth with investments in infrastructure projects, especially for improvements of roads, and labour-intensive industries, and encouragement of small-scale and cottage industries, will go a long way in creating employment opportunities. One of the main reasons for other developed nations to not consider India as a safe investment destination is the lengthy and cumbersome procedures to be followed by investors here.

A workforce which is devoid of medical benefits is less productive. Hence, a substantial amount should be reserved for health facilities.

Veena Shenoy


Economic revival

Apropos ‘Lessons from the US’ (August 22). We must give credit where it’s due. How much ever we criticise US President Donald Trump for having protectionist policies, he has been able to keep his economy and the GDP growing and unemployment at a very low level. India, despite being one of the fastest growing economies in the world, has seen sluggishness in the last year or so. Unemployment and closing down of production units by certain companies is the result of the same.


What is needed is a re-look into both corporate and personal taxes. It will alter fiscal arithmetic of the government, but then we should be ready to pay some price to revive economy and increase employment.

Bal Govind


Using plastics

With reference to ‘Government to dairies: By October 2, halve use of plastic’ (August 22). It goes without saying that Atul Chaturvedi, Secretary, Animal Husbandry, Dairies and Fisheries, exhorting the top officials of State cooperative milk federations and private dairies to halve their use of plastic is well-meaning, but could be akin to serving half-baked food.

Moreover, his ‘three-R’ strategy — Reduce, Rebate and Reuse — whereby plastic use is cut by subsidising the price of one-litre pack over half-litre pack, giving rebates to customers for returning plastics, and reuse pouches, could be a non-starter, at least for the time-being.

It may be significant to point out that various producers and suppliers of milk regularly hike retail prices in the name of high procurement price. However, the optimal use of the empty packets at the householdlevel could make some difference to deal with over-use of plastic.

Kumar Gupt


Published on August 22, 2019

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