Interest rate hike: What the aam aadmi has to say

The Reserve Bank of India on Thursday raised short-term borrowing rate (reverse repo) by 0.50 percent and lending rate (repo) by 0.25 percent in its quarterly review of the monetary policy.

As a result, housing, auto, personal and corporate loans are likely to become more expensive from next month.

Repo rate is the rate at which banks borrow funds from the Reserve Bank of India. Any increase in repo rate makes borrowing from RBI more expensive.

This in turn leads to an increase in interest rates at which banks lend money to customers.

The RBI expects this move to contain inflation and anchor inflationary expectations without disrupting growth.

However, these measures are going to burn a hole in the pockets of the aam aadmi. Rediff.com interviewed people from several walks of life to know their opinions on this rise in rates by RBI.

Click NEXT to read what the aam aadmi had to say. . .

Bhola Singh
Taxi driver

In my next life, I want to be a politician and want to be a part of the government. And I want to play with common people's lives.

My wife and I pinched pennies for the last three years to buy this taxi on loan. At present, I work 10 hours a day to repay the loan as well as to keep my family afloat.

Now that the Reserve Bank of India is hiking the rates of interest, I would be left with no choice but to sell this taxi off. And then what? I shudder to think. I have to start working as a daily worker. But will I get a job?

What will happen to my ailing wife and two children? I would be forced to discontinue their studies.

And that would ruin their future. The locality that we live in will seal their fates for ever.

My son will turn into a goon overnight and my daughter -- God only knows.

Me head hangs in shame to think that I am one of those who choose our leaders. We send people from among us to the Parliament so that they can play with our lives.

Democracy? It is a sham that leads its people to starvation.

I would rather support a dictatorship that can feed its people than practice democracy that kills them.

The politicians and policymakers are nothing but a bunch of jokers set to ruin our lives.

. . .

Chandan Kumar Pariya
Student

As a kid, I went to see a performance by magician PC Sorcar at Kolkata's Mahajati Sadan. During the show, I saw him make a box of cards disappear in a second.

I was amazed.

As an adult, I am equally amazed to see how our economists, politicians and make money vanish from the hands of the common people.

It seems that a sorceror is at work. Money that enabled us to lead a comfortable life three years back is falling awfully short now. My father, who is about to retire, could afford my preparatory studies for a competitive examination till now.

But with interest rates being hiked, I don't think I would be able to pursue my dream anymore.

In fact, now that my father will be burdened with a fatter equated monthly instalment for our home, it's high time I found myself a job.

My eyes well up with tears as I see my dreams razed to the ground.

Since my childhood, I cherished a dream of clearing a competitive examination and join the bureaucracy. But that dream will stay unfulfilled.

On second thoughts, however, it's good that I won't get to join such a 'useless' bunch of mandarins.

It's absolutely pointless.

. . .

Narayan Gopal Dutta
Retired central govt staff

We have another hike in rates by the Reserve Bank of India. Too many too soon? Or am I making a mistake?

According to policymakers, the hike is for our 'good'.

'Good' is a relative term. What is good for you may not be that 'good' for me. However, the economic pundits are people in the know and they must have thought about the collective good of the entire population of India.

And though I am often too sceptical about the steps that these people take 'for our sake', I would choose to believe this time that the 'architects' of India mean well at least on this occasion.

I am sure they must have drawn a mental map as to how the masses, already gasping under never-ending pangs of inflation, will counter these hike in interest rates.

However, as I said earlier, someone's meat is another's poison and this rise in rates may come as a benefit for people like us, who are retired and who have invested their money in various government schemes.

Now that the RBI decided to put the 'load' of more interest rates on us, it should hike the deposit rates for our benefits.

After all, we live in a democracy and we expect pro-people policies once in a while.

I heard on television today that the central bank is mulling such raise in deposit rates.

Needless to mention, I shall be all ears for such news.

After all, I served the central government for so many years and I do deserve some 'gift' from the government in the last leg of my life.

. . .

Munna Mahato
Paan shop owner

I am very angry with myself. Why did I vote? Why did I exercise my voting right? Why did we elect this government to power?

A democracy which does not look after the welfare of its people is no democracy at all. Even dictatorship seems a better option.

I bought this small paan shop on loan about seven years back. I had to sell of my wife's jewellery to make the initial down payment.

Every month, I pay an EMI of Rs 3,500 out of Rs 6,500 I earn. My wife works as a housemaid earning about Rs 1,500.

With this meager income, both of us struggle to run the house. We have two children a son and a daughter -- and we can afford the studies of only the youngest one. The elder one, my 14-year-old son, has started working as a daily labourer. He quit studies a couple of years back after completing Class VI as he felt his sister too should be given a chance to study.

Our family income does not permit school education for both the kids.

My wife and I take pride in the fact that we are sending our daughter to school. In most poor households, it is generally the other way round.

However, now that you tell me loans are going to be expensive from next month, we may have to put a stop to my daughter's education as well.

One needs to feed oneself first before anything else. And if the government of this country wants its people to stay uneducated, so be it.

Customers who gather at my shop in the evening often chat among themselves about foreign countries offering dole to the poor. These stories sound like fairy tales to me.

Ever since I grew up, I have been toiling hard for food and shelter. I never got any assistance from the government whatsoever.

Rather, the present government, which is in power, is out to slaughter the unfortunate poor like us.

. . .

Raju Shah
Auto-rickshaw owner

Ha, ha, ha, I was just expecting this. Or should I say, we were expecting this. Another burden on the poor's shoulders!

A friend was telling me this afternoon that the central government staff's pay has been raised. Therefore, we are being sacrificed for 'their' good. A great show indeed by our beloved government!

I work for 14 hours a day at present to pay off the EMI against loan I had taken a few years back to buy this vehicle. Now I need to calculate how many more hours of work I would require to put in.

Would I need to sell this auto-rickshaw off?

I have no clue. My head reels.

It is obvious that the equated monthly instalment will go up from October. A good bonanza for the festive season.

It is a crazy situation for the masses, especially the poor like us.

At times, I do feel like asking the government what is it up to? Does it want to get rid of the poor of the country for good?

Does it want us to starve to death? If that's the case, it should have the guts to spell out its intentions.

Instead of keeping up the pretence of a 'false' democracy and slowly torturing us to death, it should gun down the poor and the marginalised.

Ever since the United Progressive Alliance came to power, it has been successfully making the rich richer and the poor poorer.

I heard our Prime Minister Manmohan Singh is a veteran economist and Finance Minister Pranab Mukherjee is an expert in financial matters.

How can they let this economic exploitation go on for years?

Why can they formulate better policies to ameliorate the condition of the masses?

Am I to suppose that they too, like other leaders, are indifferent to the woes of the poor? Am I to believe that they too want us to die?

. . .

Om Prakash Shaw
Sattu-seller

What are you saying? Another hike in interest rates? Oh my God! I am at a loss. I have to marry my eldest daughter off early next year. I am almost up to my neck in debt.

And now with this hike, I may need to sell off the last piece of land at my ancestral place of Chhapra.

That means I would be left with no land of my own.

At the moment, I am living in a rented chawl with my wife and three daughters. All of them are working as housemaids.

For the last six months, we have been skipping a meal each so that we can save more for the wedding of my eldest daughter.

After I was forced to sell off four cuttahs of farmlands at Chhapra to collect money for the wedding, I bought the aforesaid small piece of land on loan so that I could sell it off for my younger daughters' wedding.

However, my plan has to be altered now under the changed circumstances.

I had to buy the new land on loan from a cooperative bank. Wonder, what the enhanced EMI would come to.

May be I would need to send my family to my village home to cut down our monthly expenses.

It's a crazy situation. We have been reeling under inflation for the past few months and now comes this hike.

What is the government up to? What does it want? Instead of cooking us, the poor, to death on a slow fire, it should send us all to a firing squad and have us shot.