WHO WILL BAIL OUT THE OLD?

Economic meltdown is a reality and is here to stay. It will certainly take a few years before things can be restored to normalcy. Governments all over the world are pumping money into the economy trying to spur the consumer demand and are announcing bailout packages to the cash starved economic entities.

Joining the band wagon, the Indian government has also taken various measures like reducing the cash reserve ratio of commercial banks, making available additional funds to alleviate the cash crunch with the hope that it will enhance the growth rate.

While these measures may provide interim relief to the economy, there is a group of silent sufferers called the “retired class”. Many of them have no medical insurance or medical reimbursement facilities, no pension or any other type of regular income and are solely dependent on their savings which they have parked in fixed deposits with banks that ensured a reasonable income with low risk.

With the banks cutting down the lending rates, they have also brought down the interest on deposit rates and this has adversely affected the cash flow of the retired class. As they advance in age, their expenses are gradually mounting while their income is steadily declining bringing unspeakable misery in their daily life.

When the government can bail out economic entities pumping millions into their kitty, why can’t they bail out this unfortunate group by subsidizing the banks for the differential rate and ask the banks to maintain at least 10% interest on fixed deposits?