A case for rate cuts?
Apropos of the column “Can a rate cut spur investment?” (FE, September 15), the answer can’t be said for certain—a rate cut may ease the burden of borrowing for investment but the world economy has slowed down considerably, too. There is a chance that a rate cut might not excite investors much. At the same time, why not push back the rate cut until the Fed raises rates? Once there is exit of a portion of the FII money, it will soon be clear to those firms betting big on India that they need to raise capital through borrowing and that is exactly when attractive rates could deliver.
But, in the context of the column, I would say that banks are really not in a very comfortable position to increase lending. Especially if the focus is infrastructure. For Make-in-India, obviously, there could be some investors keen.
But for new projects, easy land availability has to be there. So, investment may not really pick up until all these factors are sorted out.
Sumona Pal, Kolkata
Financial development in India
This refers to the column “India’s uneven financial development” by Nirvikar Singh (FE, September 14). Despite lot of ongoing financial market and banking sector reforms, both the sectors need more radical changes to become efficient and support growth and development of the economy. The bonds and securities markets have to expand further and must incorporate inclusive participation to promote the culture of investing in capital markets. Financial institutions, more particularly, the state-owned ones, must play a pivotal role in accelerating economic growth of the country; the pressing need is to improve their efficiency. A revisit of the reforms undertaken vis-vis the results need to be done to initiate any further action, if deemed necessary.
VSK Pillai, Kottayam