Decline in savings

Latest data released by Reserve Bank of India (RBI) shows a sharp decline in small savings in first eight months of financial year 2017-18. Evidently, it is at the cost of more investment in mutual-fund schemes where political and other factors can suddenly har m the investors like happened in investment in properties. A sharp decline in interest-rate was anticipated post-demonetisation when Jeevan Akshay pension-plan of LIC of India for the reason witnessed maximum investment in that period. But with currency-circulation crossing what it was before demonetisation, fall in interest-rate is not appreciable with interest-rates of RBI bonds revised from earlier 8 to 7.75 per cent. In such a scenario, two gover nment-savings-schemes designed for senior citizens with a capping of rupees 15 lakhs each namely Pradhan Mantri Vaya Vandana Scheme by LIC of India, and seniorcitizens-savings schemes now extended in banks also apart from post-offices with 8percent annual interest need some liberalisation. Rather both these schemes should be clubbed with total capping increased to rupees 50 lakhs per individual. Interest for these schemes should be autocredited on monthly basis without taxdeducted-at-source (TDS). Moreover, investment in Pradhan Mantri Vaya Vandana Scheme by LIC of India should also be exempted under section 80-C of Income Tax Act. Since investments in Public Provident Fund (PPF) has also witnessed sharp decline, interest-rate in PPF should be revived again at 8 per cent. — Subhash Chandra Agrawal