Small Savings Schemes: Interest rates of small savings schemes like Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY) are being reviewed for the first time since the formation of the new government. It is being speculated that the government may change the interest rates of these schemes. Let us tell you that the central government fixes the interest rate every quarter for small savings schemes. The government kept the interest rates on the schemes unchanged for the April-June quarter. At the same time, a decision on interest rates for the July to September quarter is likely to be taken by June 30.
What the experts say
Ashish Aggarwal, director of Acube Ventures, says the hike in interest rates will signal a move towards encouraging household savings. Household savings have remained stable in recent years. According to Agarwal, the government should adopt a strategy by changing interest rates for long-term investments to encourage savings without putting undue pressure on the treasury.
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Pressure to raise interest rates
Siddharth Maurya, founder and managing director of Vibhavangal Anukulkara Pvt Ltd, said interest rates on PF, ESAF and small savings schemes are sensitive political issues for the government. However, there is pressure to increase interest rates to benefit millions of small savers. A rise in interest rates will increase government spending and potentially widen the fiscal deficit. The government should weigh these decisions against the macroeconomic environment, including RBI’s monetary policy and bank deposit rates. If customers move away from bank deposits, further problems may arise.
As before, 7.1 percent interest is being paid on PPF.
– 8.2 percent interest is given on the deposited amount under Sukanya Samriddhi Yojana.
– Interest on three-year fixed deposits is 7.1 percent.
– The rate of interest on Post Office Savings Deposit is four percent.
– Interest rate on Kisan Vikas Patra is 7.5 percent.
– The interest rate on National Savings Certificate (NSC) is 7.7 percent.
– Interest rate of monthly income plan is 7.4 percent as on current quarter.