However, for the rest of the discussion when I talk about the concept of neutral interest rates I will mean real neutral interest rates. Therefore, if we were to assume inflation expectations are anchored at 2 percent, then the corresponding neutral real 90-day interest rate would be 2½ percent.
However, the MSME sector needs to be competitive and should not expect subsidized interest rates as this may not help them much as the cost of credit forms a relatively small proportion of their overall cost. Table 1 provides outstanding credit to MSME sector by scheduled commercial banks. 29.