But will a lower policy interest rate today give him more incentive to invest? We at the RBI think not. First, we don’t believe the primary factor holding back investment today is high interest rates. Second, even if we cut rates, we don’t believe banks, which are paying higher deposit rates, will cut their lending rates.
Looking at today’s impressive collection of papers, I have no doubt that the workshop will go a long way towards providing us with answers to many of the questions I listed. I very much look forward to hearing about your findings and the outcome of your discussions.