Induce Savers With High Interest Rates

The central bank’s primary aim is to maintain a real positive interest rate, at a level that balances the objectives of economic growth (low-interest rate) and savings (high-interest rate). However, there are many other complications, for example, maintaining currency at the desired level, which is again a function of interest rates. Over the past decade, developed economies are facing the challenge of low growth, due to which they are following the Negative Interest Rate Policy (NIRP) in a desperate attempt to pump up the growth. In India, the real interest rate has largely been positive, even though inflation is high by global standards. As a growing economy, we require capital, and for that savers have to be induced, by high-interest rates. In this country, interest rates sometimes become negative, due to structural reasons like cost-push inflation, and not as an intention of...