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Resource centre on India's rural distress
 
 

Govt’s April Fool’s joke on small savings schemes would have hurt the economy -Vivek Kaul

-Livemint.com

* Trying to project lower interest rates as a panacea for everything isn’t the right way to go about it.

The central government just played an April Fool’s joke on a large section of India’s middle class, which invests in small savings schemes.

Late Wednesday evening, the government announced a substantial cut in interest rates on small savings schemes for the three months to June.

The interest rates on Senior Citizen Savings Scheme and National Savings Certificate were cut by 90 basis points to 6.5% and 5.9%, respectively. One basis point is 0.01 percentage point.

When it comes to the Public Provident Fund (PPF), a very popular form of investment and tax-saving among India’s middle class, the interest rate was cut by 70 basis points to 6.4%. This would have been the lowest interest rate on the PPF since July 1974, when the rate was at 5.8%.

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