4 Indian Companies have it in them to give a huge boost to India's Economy ---

….  if only they will.

These are SBI, HDFC,  LIC Housing Finance and HUDCO.

All these 4 organisation should announce, simultaneously,   a full 1 % cut  from their current levels  in their lending rates for

1.      .    Home Loans
2.           Home repair/refurbishing/furnishing Loans 

for all loans from that date and all outstanding  “Floating Interest Rate Home Loans” prior to that date  and  a 0.5 % cut for all outstanding  “Fixed Interest Rate Home Loans” on that date.

These special rates should be made available for a limited period of say, 6 to 9 months only.  Reason for proposing this limited period is explained below.

Just imagine the explosive impact  this would have on the entire construction/housing sector and the whole economy.  

People’s pent-up demand for homes would now come up to the brim and lead to a huge secondary kick to the economy by way of demand for steel, cement, furniture and furnishings, lights and fittings, kitchen equipment., tiles and ceramics,  in addition,  of course, to  the huge employment demand it would generate in the construction sector which is the biggest employer of unorganized rural labour that migrates form one construction sector to another.

How are Banks/Lenders supposed to make up for this proposed 1 % interest cut – 0.5 % by internal efficiencies (through cutting waste & cost by speedier processing and simplification of processes) and the rest 0.5 % will be more than made up by the surge in business volumes.

To really get this going,  the following must also be done :

Processing charges must be made NIL or reduced to 50% of their current Level for the period of this “reduced interest rate offering”

Pressure (only pressure, no compulsion) should be put on all major Builders to also offer a Flat, across the board cut of 5 % in their rates prevailing as on date.  This will provide a double boost to the entire effort.

The reason for restricting this reduced rate offer to a limited period is to ensure that the economy gets a kick start by people rushing to take advantage of this offer. If this reduction is made open-ended or permanent there will be no “time pressure”  for people to invest and the momentum needed to put the economy into a higher trajectory will not be achieved.

I am hoping that the “powers-that- be”  in these 4 organisations will examine this proposal  and take the next step.  Ball in their Court now.

It’s not just the facts and logic that matters, Mr. Arun Jaitley .....

... you have to take the ‘mood’ and perception into account also.

You and Mr Adhia have explained with impeccable logic why nothing or nothing more needs to be done for the salaried class. So I will not debate that. However, my point simply is that expectations were different, and for more. As a consequence, there is deep disappointment, which is slowly building up into resentment, which will definitely affect votes in 2019 and the 3 upcoming State elections before that.

Do you want to be remembered for having won the admiration of financial analysts for financial prudence, particularly the foreign ones, and forever condemned for making NDA lose the polls?

Please do not dismiss this as some naive alarmist feedback – this is what the bureaucrats will tell you, primarily because election results do not affect them one bit – they will always remain in the corridors of power, no matter which party wins or loses.

If you walk the streets yourself, you will gauge the deep “let-down”  feeling of the salaried class who are your most disciplined tax-payers.

So what is my suggestion – one very simple step.

Just increase Sec 80C limit by Rs. 50,000/- to Rs. 2 lakhs.

Of course, this will have a financial cost (albeit not too huge) but the resulting relief and joy it will bring to your “committed constituency” will change the entire perception about the budget and dramatically drown out the voices of the “congenital prophets of doom” who pretend to see not even one good point in the budget because it electorally suits them to paint a dark picture.

This simple move will finesse all these biased opposition voices and give a much needed boost to the morale of the people, of the NDA and, I believe, so also of the stock market.

Do consider this option – low cost but very high returns!