The government announced on Friday cuts in interest earned on a range of state-run savings schemes including the public provident fund (PPF), the Kisan Vikas Patra (KVP) and senior citizen deposits.
Advertisement
Apart from this, post office term deposits for 1, 2 and 3 years command an interest rate of 8.4 per cent but from 1 April, a 1-year time deposit will get 7.1 per cent, 2-year time deposit, 7.2 per cent, and 3-year time deposit, 7.4 per cent. A 5-year deposit will fetch 7.9 per cent interest in the first quarter, against 8.5 per cent, while the same on 5-year recurring deposit has been slashed to 7.4 per cent from 8.4 per cent. Interest rate on PPF has been cut to 8.1%.
The interest rate on post office savings has been retained at 4 per cent. The popular five-year National Savings Certificates will earn an interest rate of 8.1 per cent from April 1 against 8.5 per cent at present.
He says, “Moreover, I believe the rate cut for all financial schemes of the government will be implemented”.
“On the basis of the decisions of the government, interest rates for small savings schemes are to be notified on quarterly basis”, the order said.
“The new rates will be effective from next fiscal (April 1, 2016)”.
It is apparent that there is a clear co-relation between the government’s earlier move to EPF to NPS and now slashing rate on small savings is just make funds going to these schemes available to the market.
Interestingly the rate of interest on the Employees Provident Fund (EPF) is 8.8 percent.
“Banks have been pointing out the interest rates on small savings instruments as one of the factors that have deterred them from reducing their interest rates”. The banks had been saying that they are forced to pay higher interest rate on their deposits as they have to compete with the small savings schemes enjoying tax benefits. The SSA has around 85 lakh accounts with a deposit of around Rs.3,500 crore, while the KVP corpus is over Rs.21,000 crore.
Sharing similar sentiments, another net savvy citizen Sudhanshu S Singh tweeted, “What’s this? Where should common people invest for safe earning”.
Banks have lowered their deposit rate by up to 100 basis points in 2015 and lending rates by around 60 basis points.
“The Narendra Modi government seems hell bent on fleecing the ordinary poor, middle and lower-middle class. It is a criminal breach of trust with hapless people who put their money in the custody of the government of India with the belief that they will not be cheated”, Congress spokesperson Randeep Surjewala said. “Hard to see Lotus in assembly post 2019”.
Finance Minister Arun Jaitley and senior officials from the ministries of finance and agriculture will be present in the two-and-half hour meeting, sources added. “Being a billionaire he can’t understand poverty?”, went an equally angry tweet from Bharatha10.
Advertisement
Communist Party of India-Marxist (CPI-M) general secretary, Sitaram Yechury, tweeted, “Small savers are the backbone of our savings”.
