1. 2% rate cut necessary to boost SMEs, create jobs: Nirmala Sitharaman

2% rate cut necessary to boost SMEs, create jobs: Nirmala Sitharaman

Union Minister Nirmala Sitharaman today defended her demand for 2 per cent cut in interest rates by RBI, saying it is essential to boost SMEs and create jobs, amid criticism that such a move would drastically affect fixed deposits.

By: | New Delhi | Updated: August 27, 2016 5:34 PM
"My comment about SMEs, their access to credit is based on real environment in which SMEs are doing business... world over interest rate is low... equally, income generation/ jobs are important," she said in a series of tweets. (PTI) “My comment about SMEs, their access to credit is based on real environment in which SMEs are doing business… world over interest rate is low… equally, income generation/ jobs are important,” she said in a series of tweets. (PTI)

Union Minister Nirmala Sitharaman today defended her demand for 2 per cent cut in interest rates by RBI, saying it is essential to boost SMEs and create jobs, amid criticism that such a move would drastically affect fixed deposits.

“My comment about SMEs, their access to credit is based on real environment in which SMEs are doing business… world over interest rate is low… equally, income generation/ jobs are important,” she said in a series of tweets.

She said that for long periods, if rates would remain high SMEs would not be able to afford the borrowing.

Sithraman was responding to two tweets by an individual:” Have you suggested 2 per cent cut in repo rate? Are you aware how will it affect the rate of interest on FDs?… Since you will probably never contest a direct election in your life, you are not really in tune with the mood of common people”.

On not contesting elections directly, she said: “My contesting any (direct/indirect)election is my party’s decision”.

She is a Rajya Sabha member from Karnataka.

Further talking about SMEs, Sitharaman said in their respective areas they create jobs and they ask for support not charity.

“If they can be facilitated they can continue business will grow, jobs remain/grow,” she said.

Recently, the minister had pitched for as much as 200 basis points, that is 2 per cent, interest rate cut by Reserve Bank to help the cash-starved MSME sector.

  1. Raman Govindan
    Aug 27, 2016 at 12:52 pm
    2 % reduction or more in interest is the right decision for the economy. the present higher interest rate helps the mone people to live a better life than commoners. the mone people who live on interest lead the life of landed aristocrats of earlier days, who splashed with the rent from their land exploiting the tillers. with lower or zero interest rate , one has got to invest in businessindustry. or his et base will come down drastically in a shorter time. there is small risk involved with inflation, with lower interest rate but it should reduce over a period of time with increased business/industrial activities and more employment generation and less out go on imports and likely more exports.
    Reply
    1. Ramesh B Bhatia
      Aug 27, 2016 at 4:34 pm
      Why RBI is collecting heavy Interest from SME or other corporate and manufacturer's when CRR / Repo rate & cost of funds ( i.e. SB a/c, FD, etc) is low as 6 to 6.5 %? so why to charge 12 to 16 % ? this will increase the cost of goods? RBI should not cut rate for banks only to make profit but must insist to apply rate on borrowing . I hope good sense will prevail and New RBI Governor will work on this to give benefit to public. After all Bank's are having Public funds . Let the public get fruits of its own savings with banks this will reduce inflation. (mahnee dar ) .
      Reply

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