“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,” the Finance ministry tweeted today morning.
The order was issued by oversight and shall be withdrawn, it added.
Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter… https://t.co/CKQryM8yUN
— Nirmala Sitharaman (@nsitharaman) 1617243845000
A day earlier, in a huge blow to the common Indian saver, the government had cut interest rates on small savings schemes, such as post office deposits and public provident fund among others, by up to 110 basis points.
The new rates were to be effective today. Before yesterday, the government had last cut interest rates a year ago by 140 bps for the first quarter of FY21.
Coming after the move to tax interest on employee provident fund contributions of over Rs 2.5 lakh per annum, yesterday’s rate cut decision had left India’s small savers deeply distressed.
If the cut had been imposed, the interest on public provident fund would have gone down to 6.4%, its lowest since 1974.
Yesterday’s action would have particularly hurt the girl child and senior citizens — the most significant beneficiaries of government’s small savings schemes. Senior citizens have already been severely impacted and reeling from low income after the nosedive in fixed deposit rates.
In case the move had not been rolled back, 5-year time deposits would have given 5.8% interest, down sharply from 6.7%. The Kisan Vikas Patra would’ve offered 6.2% against 6.9% earlier.
Interest from Sukanya Samriddhi, which gave 7.6% earlier, would have fallen to 6.9% from April 1 if the cut had not been withdrawn.
The National Savings Certificate (NSC), on the other hand, would have offered 5.9%, a steep fall from the 6.8% earlier.