As evidence of India’s K-shaped recovery, all policies should be closely scrutinized. While free meals such as doles are not welcome, others have fared poorly. The macro settings of the economy affect everyone, many of which have both winners and losers. Take interest rates. Culturally, high charges are dismissed for their wind of usury, but the rates put borrowers artificially less favorable, at the expense of lenders and savers. Next, factor in inflation; Since a deflated rupee means debtors have to pay less in real terms, they gain at the expense of creditors. Last but not least, consider a power disparity. Any financially expanding government is a huge debtor. Debt-based businesses share with it an interest—if not an open will—in both cheap loans and the burden of lighter payments. A high-powered convergence on this could tip the scales.
At prices, what is good for banks converges with the consistency, stability of consumers on paper, but many lenders are state-owned and well served by cheap retail deposits. This leaves most Indian households alone at the raw end of the economy, with rising prices and disappointing bank returns. Clearly, a fair post-Covid deal is in order.