Low interest rates in a low inflation period might not be as bad as pensioners consider those, according to RBI governor Raghunath Rajan.
The governor pointed out that industrialists grumble about high rates while retirees complain about low rates they get on deposits .” Both overstate their case, though as I have said repeatedly, the way to resolve their differences is to bring CPI inflation steadily down,”Rajan said.
Rajan spoke of a letter from a retiree that rued the lesser rate of interest on a one- year fixed deposit, making it harder to make ends meet. He, however, observed the retiree are getting more today but are not realising it as they do not take into account the fall in the underlying inflation.
The governor made his point further clear by comparing the purchasing power of money in terms of Dosa (a south Indian recipe).
SOURCE; THE FINANCIAL EXPRESS ,JANUARY 30, 2016 NEW DELHI, PAGE 10
