(a) whether the Government have recently reduced the interest rate on
small savings and Public Provident Fund;
(b) if so, the details thereof and the reasons therefor;
(c) whether the recent cut in the interest rate has affected the small
savings in the country;
(d) if so, the details thereof; and
(e) the steps proposed to be taken by the Government to help the pensioners
and other old individuals who invest their money in these sectors for their
maintenance?
FINANCE MINISTER (SHRI YASHWANT SINHA)
(a) to (e) A statement is laid on the Table of the House.
STATEMENT AS REFERRED IN REPLY TO THE LOK SABHA STARRED
QUESTION NO. 22 FOR ANSWER ON 25TH FEBRUARY, 2000
(a) Yes, Sir. The interest rates on certain small savings schemes and
Public Provident Fund have been reduced on 15.1.2000.
(b)
(i) Annex-I details the interest rates on various small savings schemes
and Public Provident Fund on and before 15.1.2000.
(ii) The marginal reduction in the interest rates on various small savings
schemes and Public Provident Fund was necessitated in the larger interest
of economy so as to align these rates with the overall interest rate
structure in the country.
(c) No adverse effect on the small savings is expected as the small
savings still offer a risk free avenue of investment with attractive
returns, easy liquidity and considerable tax incentives, available on
tap around the year to the investors. There was a growth in collections
in the current year notwithstanding the reduction made last year.
(d) Does not arise.
(e)Adequate steps are being taken from time to time to help the senior
citizens including pensioners to provide them a better opportunity to
invest their savings. The zero risk nature of small savings schemes renders
their risk-return equation very favorable. No reduction was made in the
tax-free rate of interest of 9% in the two deposit schemes meant for
retiring/retired Government Employees and Employees of Public Sector
Undertakings.
ANNEX-I
STATEMENT SHOWING THE SMALL SAVINGS SCHEMES IN FORCE, RATES OF INTEREST AND
TAX BENEFITS AVAILABLE THERE ON
Name of the Scheme interest rates % / maturity value w.e.f. w.e.f. 1.1.99 15.1.2000
1 ,@ Post Office Savings Account 4.50 No change Simple (individual account) 2 Post Office Recurring Deposit Rs.811.15 Rs.789.60 (5 Years) Maturity value for Rs. 10 denomination 3 Post Office Monthly Income Scheme 12.00 11.00 Payable monthly (6 years) plus bonus at 10% of deposits at the end of six years 4 Post Office Time Deposit Schemes: (a) 1 Year Deposit 9.00 8.00 Compounded quarterly and payable annually (b) 2 Year Deposit 10.00 9.00 :do: (c) 3 Year Deposit 11.00 10.00 :do: (d) 5 Year Deposit 11.50 10.50 :do: 5 National Savings Certificate VIIIth Issue (6-Years) Rs.195.60 Rs.190.12 Maturity value for Rs.100 denomination 6 National Savings Scheme 1992 (4-Yrs) 11.00 10.50 Payable annually 7 Kisan Vikas Patra Rs.200 Rs.200 Maturity value for Rs. 100 denomination In 6 years In 6 1/2 Years 8 ,@ Public Provident Fund Scheme (15-Years) 12.00 11.00 9 ,@ Deposit Scheme for Retiring Govt. Employees (3-Years) 9.00 No change Payable half-yearly 10 ,@ Deposit Scheme for Retiring Employees of Public Sector Undertakings (3- Years) 9.00 No change Payable half-yearly Legends: Benefit under Section 80L (of Income Tax Act) available. Benefit under Section 88 & 80L (of Income Tax Act)available. ,@ Interest completely tax free. In case of PPF benefit under Section 88 (of Income Tax Act) is also available.