India needs 'far more affordable' interest rates: FM

Finance Minister Nirmala Sitharaman has vouched for bank interest rates to be "far more affordable," saying that this is one requirement if India aspires to become a 'Viksit Bharat' (a developed nation)—not just an aspiration but a reality.

"When you look at India's growth requirements, you can have so many different voices coming out and saying the cost of borrowing is very stressful, and at a time when we want to industry to ramp up and build capacities, bank interest rates will have to be far more affordable," the says at SBI Conclave 2024 in Mumbai.

She says the country needs to have a lot more conversation on this. India's bank interest rates remain high at 6.5%. This places India among countries with "moderately high" interest rates when compared to advanced economies. Last month, the Reserve Bank of India's (RBI) MPC kept the headline rate unchanged at 6.5%, while changing the policy stance to ‘neutral’.

Just last week, Commerce Minister Piyush Goyal also batted for a key interest rate (repo rate) cut, saying it'll lead to growth. "I certainly believe they should cut interest rates, growth is a further impetus. We are the fastest-growing economy in the world. We can do even better."

On the role of food inflation in pushing the overall inflation numbers up, the FM says inflation gets "very volatile" because of the supply-demand constraints.