He said that the alignment of interest rates of the schemes will be done with G-sec rates of comparable maturities and added that the interest rate reduction would mostly affect schemes at the lower end of the maturity curve.
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“At the same time, taking into consideration the interest of small savers and some important social sector measures of the government, the rates under the girl child scheme, the senior citizen scheme, they will continue as it is”.
While the move to align post-office savings schemes with market rates will hit savers especially pensioners in a falling interest rate regime, they will gain when interest rates are on the rise. “They will be reset from 1st April”, he said.
They argue that high rates on small savings schemes run by the government make their fixed deposits uncompetitive and in turn does not allow them to reduce the cost of borrowing. Small savings schemes include Post Office Monthly Income Scheme, Public Provident Fund, Post Office Fixed Deposit Scheme, Senior Citizens Savings Scheme, Post Office Savings Account, Kisan Vikas Patra and Sukanya Samriddhi Account Scheme.
In September past year, Finance Minister Arun Jaitley had said the government will review small savings framework to facilitate monetary policy transmission by banks.
Since all currencies are declining, drop in rupee is not exceptional, he said.
“Over the last few days the NSE and BSE have experienced a lot of volatility…uncertainty and volatility is the norm world over now…India is not an exception, but is better off than many other markets”.
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Attributing the plunge in the stock markets to global factors, he said government was prepared to deal with the challenges and stressed that 7.6% GDP growth projected by the Central Statistical Office for the current fiscal year was “noteworthy and very significant”.
