IT Correspondent
New Delhi, April 01:
The Union Finance Ministry on Thursday rolled back, steep cuts on interest rates on small savings schemes, announced on Wednesday evening, with Union Finance Minister Nirmala Sitharaman declaring that “orders issued by oversight would be withdrawn”.
On Wednesday, on the last day of the financial year, the Government had announced a cut of up to 1.1 per cent in interest rates for the first quarter of 2021-22, setting up a massive hit for small savers after an earlier move to tax interest on employee PF contributions of over Rs. 2.5 lakh a year. The interest rate on PPF was reduced from 7.1 per cent to 6.4 per cent, which would bring it down to its lowest since 1974. NSC interest rate was brought down to 5.9 per cent from 6.8 per cent.
However on Thursday morning Sitharaman tweeted “The 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, that is the rates that prevailed as of March 2021”.
The cuts in schemes ranging from the National Savings Certificates or NSC and Public Provident Fund or PPF, would have hurt millions of middle class depositors. If implemented, this would have been the second slash on small savings within a year and one that would have reduced interest rates to a more than four-decade low. In the April-June quarter of 2020-21, the government had cut rates of small savings schemes by 0.70-1.4 per cent.
The government, had sought the Election Commission’s no-objection for the periodic review of interest rates and had got it before making the announcement in the middle of elections. The government had said a periodic review in every quarter was necessary.
