Jaitley questions high interest rates on savings

TIL Desk/Business/New Delhi-With private investment yet to pick up, Finance Minister Arun Jaitley today 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.

“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.

“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. According to Jaitley, Indian economy will need a lot of investment for a reasonably long period to bridge the infrastructure and industrialisation deficit that has existed for decades.