Easing of Interest Rates...whose Interest?

Tight monetary policy alone is not responsible for the slowing of economic growth, though it might be a contributing factor.

Interest rates affect growth because inflation affects growth. If inflation comes down, interest rates will come down. But to say that growth is going down only because of interest rates is a little bit of exaggeration.

India’s GDP growth for 2011-12 grew 6.5 per cent, lowest in the past nine years. This slowdown is being partly attributed to the central bank’s tight monetary policy. RBI had raised interest rates regularly between March 2010 and October 2011 to clamp on inflation.

1. Home Loans February 2012

Home buyers would have to arrange for more funds on their own, as banks will not lend for these charges any more. …Property prices are high, interest rates have peaked , stamp duty and registrations are high in many states and job markets are also not that great. Buyers of homes in the Rs 20-70 lakh bracket would get hit further and sales in this segment could fall by a further 5 to 10 per cent

2. Gold Loan by NBFC curbs March 2012


 RBI capped the amount such NBFCs can lend against gold at 60% of the value and raised the capital requirement from 10% to 12% by April 2014.


3.  Banking Gold .June 2012

Banks sold 16 tonnes of gold coins in 2011. As per RBI’s Financial Stability Report, import of gold coins by banks for retail sale to households has been a matter of concern. It has risen from just 1 per cent of their total imports in 2009-10 to 3.8 per cent in 2011-12.


 4. The Monetary Policy & Fiscal Policy September 2012

 The Reserve Bank of India (RBI), on Monday 17 September 2012, retained the indicative policy rates at the current level while cutting the Cash Reserve Ratio (CRR) by 25 basis points to 4.50 per cent.


Holding down subsidies to below two per cent of gross domestic product (GDP) as indicated in the Union Budget for 2012-13  is crucial to manage demand-side pressures on inflation. Containing inflationary pressures and lowering inflation expectations warrant maintaining the momentum of recent policy actions to step up investment, alleviate supply constraints, and improve productivity;

And we had all of them together Diesel Prices up, Gas Cylinder subsdised supply reduced to 6 per year, ...

Have a look at your portfolio to steer ahead...

Managing Investments  and Expenses are ever important in these vulnerable times.