FM jaitley questions high interest rates on domestic savings
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With private investment yet to pick up, Finance Minister Arun Jaitley wondered whether it is desirable to continue offering high interest rates on savings that translate into higher cost of lending and sluggishness in the economy. India, he said, has “peculiar” characteristics of having “quite high” percentage of domestic savings.
Higher return
“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 (that finance projects and economic activity),” he asked.
Speaking at a function here to unveil a commemorative postage stamp to mark 140 years of BSE, he said the essence of all economic activity is investment which is going to come from where resources are available.
Secured investment
“A lot of them have also an element of secured investment in them which can give people a very respectable return itself. That’s the basis on which pension funds the world over have been functioning and I think these are areas of advances as we grow over the next several years and decades. More and more opportunities are going to come to us,” he said.
Jaitley said India would need a lot of investments for a long period to bridge the infrastructure and industrialisation deficit.
“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.
