A matter of finding the right interest rate
The level of interest rate should be a key public policy objective since it is central to many issues
Let me begin by expressing my appreciation of Sudipto Mundle (Finding A Goldilocks Policy Interest Rate Mint, 19 October) for bringing to public attention the extremely important, but neglected, issue of the appropriate level of interest rates in India. In recent years, the discourse has focused on whether the current levels of interest rates should go up or down without reference to any benchmark. The general attitude is that interest rates are like any other price, determined in the market by supply and demand, with the government’s role limited to manipulating it at the margin to sub-serve some policy objective, usually inflation rate.