Dear Comrades,
New Delhi, March 4: The
government today hiked interest rates on post office savings schemes by
up to 0.2 per cent, beating the poll code by a whisker to provide
benefits to lakhs of small investors.
However, the rate on the popular public provident fund (PPF) scheme remains unchanged at 8.7 per cent.
The new rates will
be applicable for the next fiscal year from April 1 and are now
competitive with the rates on fixed deposits offered by banks.
The Election
Commission is expected to announce the schedule for the Lok Sabha polls
tomorrow, meaning the model code of conduct will come into immediate
effect.
Speculation is
rife that the Congress-led UPA government is trying to woo small
investors with the changes. Finance ministry officials, however, said
the code of conduct would not have barred them from hiking the rates.
All they needed to
do was to take permission from the poll panel. For the past two years,
the changes have been announced in the last week of March.
Not all post
office rates have been raised — the time deposit rates have gone up, but
those on savings deposits, monthly income scheme (MIS), national
savings certificate (NSC) and senior citizen savings scheme (SCSS)
remain the same.
In the schemes
where the rates have gone up, they are now competitive with the schemes
of banks. The country’s largest bank State Bank of India offers 9 per
cent for deposits of one year and less than two years. Other state-owned
banks also offer returns of around 9 per cent for the period.
While post office
rates are valid for the entire year; bank deposit rates can change
within a year according to the policy rates announced by the Reserve
Bank of India during periodic reviews.
The decision to
align the small savings rates to the comparable gilt rates was taken on
the basis of a report submitted by the Shyamala Gopinath committee in
June 2011 after a comprehensive review of the national small savings
fund.
The annual changes have won the confidence of investors at a time the stock markets remain volatile and inflation is high.
Analysts said
people were flocking back to small saving schemes, seeking the safety of
government instruments after a host of ponzi schemes sank, destroying
thousands of crores of investors’ money.
Data indicate that deposits into the public provident funds and other small saving schemes have begun to register a rise.
Between April and
December 2013, deposits into the public provident fund grew to Rs
1,391.43 crore against Rs 1,169.12 crore a year ago, according to data
of the Controller General of Accounts (CGA).
The contributions
to saving deposits and national saving certificates, too, have witnessed
a revival after steady erosion over the past few years.
The CGA data
indicate that these contributions to the schemes jumped up to Rs
1,732.88 crore in the first three quarters of this fiscal compared with
net withdrawals of Rs 460 crore a year ago.
http://www.telegraphindia.com