RBI must cut interest rates

Govt push needed to boost consumption and investment

Devangshu Datta 

Devangshu Datta One way to devalue debt is via a rapid increase in inflation. As inflation climbs, the value of money falls and the real interest rate on historic loans is reduced. Governments and central banks understand this well and nations with high public debt often try to induce inflation. Conversely, public debt burdens look bigger if inflation falls. Tax collections stagnate in nominal terms.  Central banks can manipulate money supply to tackle inflation/ deflation, while a government can easily refinance by issuing treasuries at lower yields. It can also impose higher tax rates. The ...

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