Imagine this - you invest Rs.100/- at a 6% for 2 years, you get back Rs.112.36/- at the end of 2nd year. Income from FD is taxable, so assuming you fall under the 30% bracket, we are talking about paying Rs.3.708/- as taxes, which makes the post-tax returns as Rs.108.65/- or an effective growth rate of 4.24%.
Considering an average inflation rate of 6%, you are actually losing money at the rate of 1.76% by investing in FDs.
If you hate someone then ask them to invest in FDs
If you are looking to earn something from interest. Then you must look at real interest rate ( Interest rate -also called Nominal interest rate Minus Rate of inflation). At the moment the real interest rate is also high in India compared to other asia pacific emerging countries. But we all know the history of inflation in India (& I believe government’s old method and babus @ statistics department understate inflation)
Another risk to this positive real interest rate is recently belligerent oil prices and high taxes on oil prices. Then u know what happens to consumer prices and inflation
U may recollect “dhosa” story from ex RBI governer Rajan here