Big Data Analytics Solutions | Financial Services in India |Decimal Point Analysis

Interest Rates Burden On Businesses

Real Interest Rates Burden On Indian Businesses


In recent months there has been a spate of news of stress in Indian businesses, both financial and non-financial businesses. Commentators are assigning various causes for the same.

However, in our view, the main cause of this stress is the unbearable burden of astronomically high real interest rates charged by the Indian banking industry, especially private sector banks, to Indian businesses.

The chart below shows real interest rate burden on Indian businesses. The real interest rate for each month is computed as average bank lending rates for the previous twelve months minus average CPI inflation for the same previous twelve months. The numbers are percentages per annum.


Chart 1: Real Interest Rates Burden on Indian businesses

Source: Decimal Point Analytics

The real rates have moved from about 2% pa in 2013 to about 7% pa in 2019. These usurious rates will kill off Indian businesses and any in the process destroy any growth potential that the country has unless fast corrective action is taken soon.

This article was first published here


Decimal Point Analytics

×

Decimal Point Analytics (DPA) will process the information in this form to share information as requested. By checking the above box you confirm your acceptance to receive the communication. You can unsubscribe any time by clicking the ‘Unsubscribe’ link in the footer of any email you receive from us, or by contacting us at

Back to Insights

We use cookies to measure website performance, provide social media features and personalize content.
Close this dialog to confirm you are happy with that, or find out more in the privacy statement.