Interest Costs in Indian Industries An Econometric Analysis

An Econometric Analysis K A Menon To bring the cost of capital in alignment with the 'scarcity value' of capital in the economy and to bring about more efficient allocation of productive resources, there has been, over the years, a gradual raising of interest rates on saving media and on loans. This has given rise to sporadic protests that interest rate policy has tended to become growth-inhibitive. Countering this view, it has been argued that despite the general scarcity of capital the level of interest rates in the country has been kept artificially low resulting in poor saving, absence of cost consciousness and misdirection of scarce resources.