Opinion DC Comment 19 Feb 2016 Hope for cheaper loa ...

Hope for cheaper loans

DECCAN CHRONICLE.
Published Feb 19, 2016, 12:37 am IST
Updated Feb 19, 2016, 12:37 am IST
The PPF is also a life-saver for crores of people in the unorganised sector.
Representational image
 Representational image

The government has done well to leave long-term savings schemes, like the Public Provident Fund and those for senior citizens and the girl child, untouched whilst reducing the rate of interest by a quarter per cent on short-term post office deposits and Kisan Vikas Patras. The government should now consider equalising the rate of the PPF and Employees Provident Fund because the organised sector workers enjoy the best of both worlds.

The interest on PPF is currently 8.7 per cent and EPF 8.8 per cent, apart from their employers also contributing to the latter. EPF beneficiaries get huge tax benefits at the time of withdrawal and on interest earned. Many of these employees also subscribe to the PPF as there is no bar on doing this. The PPF is also a life-saver for crores of people in the unorganised sector.

 

The cut in rates of small savings will not necessarily affect the economically weaker sections as today the Narendra Modi government has provided a clutch of insurance schemes and social security schemes at low premiums to encourage the poor to save over the long term. However, the government needs to make people aware of these schemes as the poor do not have financial advisers.

The I&B ministry should use Doordarshan to relentlessly popularise these schemes and not squander its budget on English channels. And now that the banks have succeeded in getting the government to cut small savings rates, it is hoped they will cut interest rates and pass on the benefit of the RBI’s 1.75 per cent cut in rates last year and not find more excuses for not lowering interest.

 

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