GOVT ROLLS BACK RATE CUT ON SMALL SAVINGS, CALLS IT ‘OVERSIGHT’
NEW DELHI: Union finance minister Nirmala Sitharaman on Thursday said the government will rollback a steep interest rate cut on small saving schemes such as PPF and NSC, saying that the move – announced a day before the second phase of assembly elections in two states -- was an “oversight”.
“Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” Sitharaman said in a tweet early on Thursday morning. According to Wednesday’s order, interest rate on Public Provident Fund (PPF) was reduced by 0.7% to 6.4% while National Savings Certificate (NSC) was to earn 0.9% less at 5.9%.
The rollback is believed to be aimed at preventing widespread backlash from citizens at a time when elections are ongoing or due in four states a Union territory.
“There was already a loot on petrol and diesel and soon after the elections end, the small saving rates will be reduced and there will be a loot on the savings of the middle-class... This government is of jumlas (rhetoric) and the loot of common people,” Congress leader Rahul Gandhi said on Thursday.
NEW DELHI: Finance minister Nirmala Sitharaman on Thursday said the government will roll back a steep interest rate cut on small savings schemes such as PPF and NSC, saying it was an oversight, a move being seen as an attempt by the Bharatiya Janata Party (BJP) to contain the fallout of a decision hitting the common man in the ongoing elections in West Bengal, Assam and three other states.
While the central government routinely announces interest rates for small savings schemes at the end of every quarter, the Wednesday’s decision to cut interest rate by up to 1.1% across various small savings schemes, including the National Savings Certificates (NSC) and Public Provident Fund (PPF) came a day before the second phase of polling in West Bengal including the political hotbed Nandigram, from where West Bengal chief minister Mamata Banerjee is contesting.
The decision to roll back citing “oversight” was taken hours after announcing the steepest cut in the rate on small savings schemes.
“Interest rates of small savings schemes of the Government of India shall continue to be at the rates which existed in the last quarter of 2020-2021, i.e., rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” the Union finance minister said in an early morning tweet.
Interest rate on the PPF was reduced by 0.7% to 6.4%, while National Savings Certificate (NSC) was to earn 0.9% less at 5.9%.
The highest cut of 1.1% was effected in the one-year term deposit.
The new rate was brought down to 4.4% as compared to 5.5%.
Interest rates for small savings schemes are notified on a quarterly basis.
Taking a dig at the finance minister after she announced that the government will withdraw orders to cut interest rate on small savings schemes, the Congress on Thursday said one can imagine the functioning of the economy when such a duly approved order affecting crores of people can be issued by an “oversight”.
Once restored, the PPF and
THE DECISION TO ROLL BACK RATE CUTS, CITING ‘OVERSIGHT’, WAS TAKEN HOURS AFTER THE ANNOUNCEMENT
the NSC will carry an annual interest rate of 7.1% and 6.8%, respectively.
One-year term deposit scheme to earn a higher interest rate of 5.5% during the first quarter of the current fiscal, while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6% as against reduced rate of 6.9%.
Accordingly, the interest rate for the five-year senior citizens savings scheme would be retained at 7.4%. The interest on the senior citizens’ scheme is paid quarterly.
Interest rate on savings deposits to be restored at 4% annually from the reduced rate of 3.5%.
Term deposits of one to five years will fetch interest rate in the range of 5.5-6.7%, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8% as against the reduced 5.3%.