New Delhi: The finance secretary Ratan Watal on Monday indicated that the government may not be in a hurry to cut interest earned on small saving schemes — schemes mostly offered by the post offices and on PPF. However, the interest of small savers, especially of senior citizens and girl child, will be kept in mind while reviewing the deposit rates for these schemes.
Also the government will next month launch two gold schemes — monetisation and sovereign bond — to rein in demand for physical gold and contain its import. It said Rs 4,147 crore has been disclosed under the black money compliance window, higher than Rs 3,770 crore stated earlier.
“It (cut in deposit rate on small savings) is an idea which has come forth only 3-4 days back,” said Mr Watal. Also, finance ministry officials hinted that cutting interest rates on small saving schemes steeply may impact the saving rate in the country. This will also impact Centre as it uses proceeds of small saving schemes for its expenditure and a fall in it will increase government’s market borrowing. “The interest of small savers, the interest of senior citizens, interest of girl child scheme, all these aspects will be taken into account. Social security component of small savings schemes is very important and government will keep that in mind,” economic affairs secretary Shaktikanta Das said. The finance ministry had last week said it would review the small savings schemes, which includes PPF and post office deposits to nudge banks to cut lending rates.
While RBI has cut interest rates, banks have been reluctant to fully pass the cut to consumers by lowering interest rates on loans by equal proportion. Banks have urged that their deposit rates are high because small saving scheme are offering savers higher returns. Banks have told government that until their deposit rates don’t come down, they will not be able to pass fully benefit of lower repo rate by RBI to consumers and industry.
Small saving schemes include Post Office MIS, PPF, Post Office Time Deposit Scheme, Senior Citizen’s Savings Scheme, Post Office Savings Account and Sukanya Samriddhi Accounts. After eight years, India in August imposed 10 per cent import duty on wheat till March 2016 to curb its imports at a time when there is excess of domestic stock. This is besides 20 per cent safeguard import tax imposed last month on some steel products.
