Finance Minister Nirmala Sitaraman on Thursday said that the government has rolled back its decision to cut interest rates in small savings schemes like PPF and NSC, saying it was an oversight.
The government on Wednesday had cut interest rates by up to 1.1 per cent 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 revised rates were to come into effect from April 1 and will remain in effect till June 30.
The interest rates on such schemes will continue to remain as they were during January-March, reversing Wednesday’s highest cut of 1.1 per cent.
“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 Orders issued by oversight shall be withdrawn,” Sitharaman said in an early morning tweet.
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Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India
— Nirmala Sitharaman (@nsitharaman) April 1, 2021
The now-withdrawn order would have brought down the interest rates on Public Provident Fund (PPF) by 0.7 per cent to 6.4 per cent, while National Savings Certificate (NSC) was to earn 0.9 per cent less at 5.9 per cent.
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”.
As per the latest decision, PPF and NSC will carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively.
Accordingly, the senior citizen’s savings scheme will now earn 7.4 per cent instead of 6.5 per cent. The interest on the senior citizens’ scheme is paid quarterly.
The interest rate on savings deposits to be restored at 4 per cent annually from the reduced rate of 3.5 per cent.
Term deposits of one to five years will fetch interest rate in the range of 5.5-6.7 per cent, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8 per cent as against the reduced 5.3 per cent.
The one-year term deposit scheme to earn a higher interest rate of 5.5 per cent during the first quarter of the current fiscal while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6 per cent as against reduced rate of 6.9 per cent.