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Poosarla Sai Karthik
Tech guy with a busi... • 2d
How You Pay the Price, Even Without Taking a Loan When the RBI cuts repo rates, the first thing people hear is: “Great, loans will become cheaper.” That’s true but what most people don’t see is how even those not taking loans end up paying in other ways. The impact of a rate cut doesn’t stop at borrowers. It quietly reaches everyone. The biggest way it hits is through inflation. Lower rates mean more people and businesses borrow and spend. But when demand goes up faster than supply, prices rise. And once prices rise, they usually don’t come down. Groceries, fuel, medicines, school fees everything starts costing more. This affects every person, especially those who don’t have the extra income to handle rising monthly expenses. At the same time, interest on savings drops. Banks reduce FD and savings account rates. So if you’re someone who avoids loans and puts your money in the bank hoping to earn steady interest, you’re earning less than before. And if inflation is higher than the interest you’re earning, the value of your money is quietly going down even if the number in your bank account looks the same. Then comes indirect taxation. As prices of goods and services go up, so does the GST you pay on them. This means you’re paying more tax, not because tax rates increased, but because the prices increased. Unlike income tax, GST doesn’t care how much you earn it hits everyone the same. So middle class and low income groups feel it the most. On top of this, wages don’t increase as fast. Your salary might stay the same for a year, but the cost of living climbs month after month. You end up spending more, saving less, and getting no real benefit from the system whether you took a loan or not. So yes, a repo rate cut may look like it helps the economy by encouraging borrowing. But if you look closely, even those who don’t borrow end up paying for it. Through higher prices, reduced savings income, and more tax on everyday purchases, the common consumer loses either way.
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