Government to withdraw cut in small savings rates, says Finance Minister Nirmala Sitharaman
Finance Minister Nirmala SitharamanImage source: IANS

Government to withdraw cut in small savings rates, says Finance Minister Nirmala Sitharaman

The central government on Thursday rolled back deduction on interest rates on small savings schemes

New Delhi: The central government on Thursday rolled back deduction on interest rates on small savings schemes, including National Savings Certificates or NSC and Public Provident Fund or PPF, announced on Wednesday.

Finance Minister Nirmala Sitharaman on Thursday tweeted, "Interest rates of small savings schemes of the government of India 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 Orders issued by oversight shall be withdrawn."

On Wednesday, the Centre had declared a huge cut in interest rates of up to 1.1 per cent for the first quarter of 2021-22 in a big blow to middle-class depositors. The interest rate on PPF was concentrated from 7.1 per cent to 6.4 per cent. NSC would be down to 5.9 per cent from 6.8 per cent.

Meanwhile, the Centre has received a total of Rs 32,825 crore through disinvestment in the financial year 2020-21.

As the disinvestment processes were hit by the pandemic, the realisation turned out to be way lower than the original target of Rs 2.10 lakh crore for the financial year.

In a tweet on Wednesday, Secretary, Department of Investment and Public Asset Management (DIPAM), Tuhin Kanta Pandey said, “Total DIPAM receipts in 2020-21 stand at Rs 71,857 crore, which include disinvestment receipts of Rs 32,835 crore and dividend receipts of Rs 39,022 crore.” Several public sector undertakings (PSUs) proposed to be divested during the fiscal did not go through the sale process as the pandemic impacted the processes.

Finance Minister Nirmala Sitharaman
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In a decision, which would have delivered a blow to savers who depend on small savings schemes for income and social security, the Ministry of Finance on Wednesday announced the reduction in the small savings rate to 3.5 per cent for the first quarter of the financial year starting April 1, 2021. The small savings rate during January-March was 4 per cent annually.

Further, in an office memorandum, the Department of Economic Affairs had said that the 1-year time deposit rates has been reduced to 4.4 per cent from 5.5 per cent, and the 2-year, 3-year, 5-year time deposit rate have been cut to 5.0 per cent, 5.1 per cent and 5.8 per cent, respectively, on a quarterly basis.

The 5-year recurring deposit was cut to 5.3 per cent from the previous 5.8 per cent.

Interest rates on Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate were cut to 6.4 per cent, 6.9 per cent and 5.9 per cent, respectively on an annual basis. The interest rate on Kisan Vikas Patra was decreased to 6.2 per cent.

Now, these changes have been reverted post the government's decision to withdraw the order

(With agency inputs)

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