Directed Investment is Need of the Hour, Not Lower Rates

........However, a broad-brush tight monetary policy by itself may have limited efficacy in bringing down inflation in the current Indian context. In a paradoxical way, in fact, it might actually have unintended consequences of achieving just the opposite. India is not yet a borrow-and-spend economy . Only 18.6% of banking loans are towards retail and consumption. That means higher interest rates passes on as a higher input cost, through 81.4% of banking loans that go to producers and intermediaries. High interest rates penalise infrastructure investments that are needed to address the supply side. But, seeking lower rates across the board may be mis placed at this stage..........

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