New Delhi: Union Finance Minister Nirmala Sitharaman has said that the latest decision on rate-cuts on savings deposits maintained with the Public Provident Fund and National Savings Scheme (NSC) was "issued by oversight".
The Finance Minister was responding about an official memorandum issued by the Finance Ministry on Wednesday. This memo highlighted a drop in key savings rates, applicable from April 1 onwards.
The Finance Minister tweeted"Interest rates of small savings schemes of GoI 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 Orders issued by oversight shall be withdrawn."
The ministry is likely to continue with the interest-rates from FY 2020-21 for the new financial year and an announcement regarding this is expected soon.
Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021.— Nirmala Sitharaman (@nsitharaman) April 1, 2021
Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India
The now cancelled memo revised interest rates on Savings deposit from 4% to 3.5% whereas PPF rate was down from 7.1% to 6.4%. Interest on senior citizen savings schemes was down from 7.4% to 6.5% while one year term-deposits were revised to 4.4% from 5.5% previously. The interest rate on National Savings Certificates was cut from 6.8 per cent to 5.9 per cent, Sukanya Samridhi Yojana from 7.6 per cent to 6.9 per cent and Kisan Vikas Patra from 6.9 per cent to 6.2 per cent.
The Memo on Wednesday hampered the common man's aspirations. Congress leader Digvijay Singh said the decision to roll back the step was taken due to fear of alienating the small saver and common man with the state elections currently on. He sought a promise from the Finance Minister that it would not be implemented again once the elections are over.
With the financial year coming to an end, a rate-cut was perhaps the last thing, the Common Man would have thought. Meanwhile, here are some reactions from Twitter:
The Finance Minister must explain the flip flop to the nation why first such anti people decision was taken to cut the interest rates on small saving schemes including PPF & NSC and then taken back?— Ashok Gehlot (@ashokgehlot51) April 1, 2021
@BJP’s Acche Din continues. Interest on small savings cut steeply:
PPF from 7.1% to 6.4%
NSC from 6.8% to 5.9%
Senior Citizens Savings from 7.4% to 6.5%
Why doesn’t @BJP just annihilate middle class & senior citizens in one go rather than this slow painful death?— Mahua Moitra (@MahuaMoitra) March 31, 2021
Lowest ever PPF rate at 6.4%. Is it good enough to even cover annual inflation? pic.twitter.com/TT0vtexH3m— Anil Swarup (@swarup58) March 31, 2021
Savers are losers— anshuman tiwari (@anshuman1tiwari) March 31, 2021
Unprecedented cut in interest rates on small savings schemes, rates cut by massively between 40 -110 basis points
Interest on PPF hits 46 year low of 6.4%, dips below 7% #savings pic.twitter.com/IFlueJrWJT
You have a high salary, I will tax you.— Wisdom Dawns (@listen2dil) March 31, 2021
OK let me invest in PPF, Mutual Funds to save, I will lower the interest rate and tax your dividend.
Ok let me withdraw , no you cannot withdraw immediately,
OK I will withdraw after some time, OK I will tax when you withdraw.
PPF interest also reduced to 6.4%.— Kapil (@kapsology) March 31, 2021
When Modi came into power, it was 8.7%.
* With inputs from agencies.