PM’s move to increase interest rates for sr citizens is laudable
The best thing about the PM’s speech on December 31 is the locking in of relatively high interest rates on deposits made by senior citizens.
Back in March, when interest rates on the government’s savings and deposit schemes were lowered, I had written in these pages about how unfair the reduction in the Senior Citizen Savings Scheme was.
At that time, I’d pointed out that what looked like a small reduction (0.7%) in the interest rate paid on the scheme amounted to a reduction of 7.5% in the income that a senior citizen derived from this scheme.
I’d argued that while lower inflation and interest rates and (presumably) higher economic growth are all very well, but they carry no benefit for retirees who are past the earning and accumulative phase of their lives.
Most Indian retirees are psychologically locked into our financially destructive culture of investing only in fixed income asset types. This means that lower inflation and lower interest rates brings them no benefit at all. In fact, it would generally leave them worse off because their personal inflation rates are always higher than the official ones.
Because of these reasons, there is a strong case that the government should ensure that senior citizens get a special deal in terms of the interest rates they earn.
The returns that they get on their deposits (up to a certain limit) should be seen not as a financial matter but as social expenditure, a form of direct benefit transfers.
The PM’s announcements that senior citizens will get 8% on their ten-year deposits up to ₹7.5 lakh and that this rate will stay unchanged is a step in the right direction.
Of course, this shouldn’t be the whole story. It’s unclear at the moment whether this is an enhancement of the existing senior citizens scheme or if it’s a new kind of deposit. If this is a separate scheme, then the SCSS should also be enhanced in the same way.
Smartphone component maker Wistron Corp, which counts Apple Inc among its customers, has applied for permission to expand its plant in the Indian city of Bengaluru, a high-ranking regional government official said on Monday.
The Taiwanese contract manufacturer has also requested that its application be fasttracked, the official at the state government of Karnataka in southern India told Reuters.
The move comes less than two weeks after the Wall Street Journal reported that Apple was in talks with India’s federal government about the possibility of assembling products in one of the world’s biggest smartphone markets, where the U.S. tech firm controls less than 2 percent.
Apple setting up production in India would be a significant win for the government which has embarked on a major campaign to attract global manufacturers under the slogan “Make in India”.