Economic Survey 2011-12: Progressive deregulation of interest rates would help limitedly, says Indranil Pan, Kotak Mahindra Bank

NEW DELHI: With the Economic Survey 2011-12 suggesting that progressive deregulation of interest rates on savings accounts will help raise the financial savings, Indranil Pan, Chief Economist, Kotak Mahindra Bank feels that the last bastion in terms of savings rate has already been deregulated in terms of the savings rate on the small savings that is offered by the banks.

"To a certain extent it would definitely help improve the financial savings for India as we go ahead, but it would be too robust to assume immediately that the financial savings would suddenly jump up. It would probably take a bit of time because investments in gold are locking up savings potential for India into unproductive assets," he told ET Now.

"Even if we look at the data, the savings as a proportion of GDP actually has been going down, so it would take a bit of time. Yes, the transmission definitely improves if there is a complete deregulation in terms of the savings rate and the interest rate instruments in the Indian economy," he added.