NEWS
Govt quickly rolls back rate cut on small savings
Within less than 12 hours, govt rolls back its order to slash interest rates on small savings like PPF and NSC; Opposition terms it as sign of “insensitivity”.
Within less than 12 hours, govt rolls back its order to slash interest rates on small savings like PPF and NSC; Opposition terms it as sign of “insensitivity”.
Coming amidst the assembly elections, the government’s order on Wednesday to slash interest rates on small savings schemes, including Public Provident Fund (PPF) and National Savings Certificate (NSC), surprised many. But within less than 12 hours, the government rolled back its decision while the opposition termed the entire episode as a sign of “insensitivity”.
Union Finance Minister Nirmala Sitharaman, in a tweet on Thursday, said that the interest rates of small savings schemes of the Government of India shall continue to be at the rates that existed in the last quarter (January-March) of the financial year 2020-21.
"Orders issued by oversight shall be withdrawn," Finance Minister Nirmala Sitharaman tweeted early today morning.
On Wednesday, the Finance Ministry had announced a steep cut in interest rates for small savings schemes by 50-110 basis points for the first quarter of 2021-22, starting 1 April. Interest rates for small savings schemes are notified on a quarterly basis.
Incidentally, West Bengal and Assam are entering the second phase of assembly polls. This could have had an impact on the polls, particularly among people who have invested in small savings schemes.
Former Finance Minister P Chidambaram reacted to the government’s decision and subsequent withdrawal through tweets. "Announcement of interest rates on savings instruments for the next quarter is a regular exercise. There is nothing inadvertent about its release on March 31", he said.
"When caught, the Finance Minister is putting forward the lame excuse of inadvertent error," he added.
"When inflation is at about 6% and expected to rise, the BJP government is offering interest rates below 6% hitting those who save and the middle-class below the belt”, Chidambaram added.
The government order on Wednesday had reduced the interest rate on PPF by 0.7% to 6.4% for the April-June quarter, making it the lowest in 46 years. This was the first time since 1974 that the PPF interest rate fell below 7%.
The interest rate for NSC would have earned 0.9% less at 5.9% while the girl child savings scheme, Sukanya Samriddhi Yojana account, was slashed by 0.7% to 6.9%.
