Economic Survey: Need modest real interest rates to boost pvt investment

This savings behaviour also gives a key degree of freedom to policymakers as the savers and the borrowers can be disentangled

The Economic Survey for 2018-19 stressed the need to lower real interest rates to give a boost to private investment, something that was proposed by a member in the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC).

The real interest rate is the difference between the lending rate (the Survey took State Bank of India’s base rate) and the prevailing inflation rate. Similarly, the real policy rate is the repo rate minus inflation. 

Considering the latest inflation print at 3.4 per cent, while the repo rate is 5.75 per cent, and the SBI base rate is 9.05 per