Small investors (such as households) *** their savings to sustain their livelihood present and futurd, but government reduces interest rate for boosting economy. This is inequitable. How?
Households mobilize their savings and deposits it in the banks to earn interest for meeting their current and future needs.
If there is a fall in the interest rate, they get less interest, and, hence, find it difficult to sustain their livelihood.
But, on the other hand, RBI thinks of reducing interest rate for boosting the climate of investment.
There is a contradiction between the two, because increase in investment promotes aggregate demand and output while savings is a leakage from flow of income, and it should be resolved in a manner so that no one suffers.
