Saying that it was hard to spell out when the Reserve Bank of India (RBI) would be in a position to reduce interest rates, the RBI Governor D. Subbarao, has asked industrialists and others to go ahead with their projects.
Addressing members of the Andhra Chamber of Commerce and Industry here on Thursday, Dr. Subbarao said that the best time to make investments was now. Saying that fortune favoured those who took risks, he advised investors to be ready to “battle the uncertainties”.
He said the criticism RBI was facing today was that the raised interest rates were moderating growth. But the RBI also had a responsibility to discharge to the 80 per cent of the people in the country who did not have a voice and were affected by rising inflation. Growth was causing inflation and the two needed to be balanced. The goal of the apex bank was to bring down inflation to manageable level.
Talking about interest from the savings point of view, Dr. Subbarao said while the savers wanted a higher rate of interest the borrowers wanted a lower rate of interest. It was for the RBI to strike a balance. While rupee depreciation was beneficial to exporters it was a loss to importers. It was a loss to the Government which was importing and giving subsidies and it was a loss to those who had borrowed from abroad.
Unfortunately, even exporters were not benefiting because they were not “re-negotiating the terms of the contract” after depreciation of currency.
