This book addresses the evolution of an interest rate structure in India from the controlled era prior to 1991 to the gradual transition to market oriented rates. The anomalies, distortions and aberrations from time to time got addressed simultaneous to the outcome of the expansion of the economy. Some areas are still open to corrections and corrective actions. Subsidies in interest rates give rise to economic inefficiency. The large scale capital flows in the world into India and outflows could affect interest rates. Concerns at the large outgo of interest payments of Government of India and State Governments have been highlighted with possible remedies.
Sound regulation is a pre-requisite for a modern financial sector. Building of new institutions and strengthening existing ones will give rise to a robust financial sector. India's position as one of the five largest economies in the world for the rest of this century needs to be consolidated. Liberalism answers to the requirements of a market economy. Education, organisation and self-discipline are the only missing ingredients in the presence of ample resources.
Harmony is an expectation as well as a result of orchestration of all players in a financial market. Integration of India with the world on India's terms is the main theme. The book is for the earnest in authority to see policy into practice and for the intelligent observer who can balance opposites.
G Giridhar Prabhu (b. 1957) graduated in Commerce from St Aloysius College in Mangalore under the University of Mysore. Resident of Mangalore, Karnataka, he owns and manages cashew manufacturing units at two locations, Urban Mangalore and Rural Maharashtra which are credited with over 50 firsts in the cashew industry in India and the world. Engaged in small and now medium enterprise he has vast experience in business, industry and public life. He has been active in trade associations and was the President of Kanara Chamber of Commerce and Industry in Mangalore and actively promoted infrastructure, large Industry, the Mangalore SEZ and trade and commerce of the region. He has been Vice Chairman of the Cashew Export Council of India and President of the Karnataka Cashew Manufacturers Association.
A specialist in cashew, Mr. Prabhu has been a member of the Indian Cashewnut Development Council and Member, National Steering Committee on Cashew, under the Ministry of Agriculture. He has a passion for management and economics and is currently Chairman of the Economic Research Centre, Mangalore founded by Liberal Economist, Late Prof B R Shenoy. He is married to Archana and has three daughters Achala, Amitha and Anuja.
Preface
Abbreviations
Introduction
PART 1
Interest Rates 1992 – 2010
Anomalies, Aberrations and Distortions
1. Call Money
2. Small Savings and Market Rates
3. Open Market Operation in Government Securities
4. Interest Rates and Nbfcs
5. Effecting Savings on Interest Payments of the
Government of India
6. Transition of Primary Debt Issue from Rbi to
Government
7. Evolution of an Interest Rate Structure for India
8. Interest Rates and Exchange Rate Premia
9. Financial System and Multiple Interest Rates
10. Interest Rate, State Governments and Market
11. Immediate Positions
12. Action from the Reserve Bank of India
13. Forex Volatility and Interest Rates
14. Government of India: Debt Issue Calendar a Golden
Opportunity
15. Open Market Operations
16. Interest Rate Decontrol in a Free Market Environment
17. Alignment of Bank Deposit Interest Rates: Analysis
and Case for Regulation
18. Prime Lending Rate
19. Monetary and Credit Policy Current Imperatives
20. Savings Bank Rate
Part 2
Interest Rates 2011 - 2014
Towards Harmony
21. Bank Rate
22. Interest Rate Regulation of Bank Deposits and Loans
23. Scope for Reduction in Interest Rates on Central
Government Borrowings in the Near Term
24. Interest Rate Subsidies and Subvention
25. Management of Capital and Institution Building
Epilogue
Annexures
Notes to Annexures
I.Research Topics
II.On Inflation
III.Open Market Operation
IV.Budget at a Glance
V.Receipts
VI.Receipts Budget, 2014-2015
VII.Receipts Budget, 2014-2015
VIII.Receipts Budget 2014 -2015
IX.Deposit Rates of Commercial Banks
X.World Interest Rates
XI.India’s External Debt
XII.Acknowledgements
Index
xvi+376 pp