In a move that will hit common man, the government on Friday slashed interest rates on all small savings schemes, including PPF, Kisan Vikas Patra (KVP) and senior citizen deposits, to make them more market aligned.
Come April 1 2016, interest rate on Public Provident Fund (PPF) will be 8.1 per cent instead of 8.7 per cent.
Similarly, the interest rate on Kisan Vikas Patra will also be reduced to 7.8 per cent from 8.7 per cent while senior citizen savings scheme of five years would earn 8.6 per cent interest compared with 9.3 per cent.
Girl-child saving scheme, Sukanya Samriddhi Account will see interest rate of 8.6 per cent as against 9.2 per cent, according to a Finance Ministry order.
Announcing the rates in the capital on Friday, Economic Affairs Secretary, Shaktikanta Das said that This is being done in line with the recommendations of the Shyamala Gopinath Committee to ensure that the interest rates of Small Savings Schemes are market linked.
“The interest rate which has been notified is for next quarter that means the 1st quarter of 2016-17: said Shaktikanta Das.
Congress tonight reacted sharply to government’s move of slashing interest rates on all small savings schemes, including PPF.
“The Narendra Modi government seems hell bent on fleecing the ordinary poor, middle and lower-middle class. It is a criminal breach of trust with hapless people who put their money in the custody of the government of India with the belief that they will not be cheated,” Congress chief spokesman Randeep Surjewala said.
Economic Affairs Secretary Shaktikanta Das said that this move will enable banks to consequently reduce their deposit rates and extend loan and credit to public and borrowers at lower rates.
“This is a normal process and it has been going on from 2012-13,” said Shaktikanta Das, Economic Affairs Secretary.
However, unlike previous years when interest rates were set for the full year, the government will from now on set interest rates every quarter based on previous three-month yields on Government-Securities or G-Sec.
From the year 2012-13, the interest rates on various Small Savings Schemes (SSS) are recalculated and notified in the month of March every year. These rates are applicable for the next financial year.
The rates of interest on various small savings schemes for the First Quarter of Financial Year 2016-17 can be seen in the below mentioned table.