The government recently endorsed interest rate cuts on small savings schemes such as PPF and NSC, saying it was an oversight. Economists of India’s largest bank SBI have welcomed the move. “We believe the government has taken the best decision not to change the rates on small savings schemes as we are currently going through an unprecedented epidemic crisis.”
In a report, SBI economists have also suggested three measures. “We believe a 3-fold strategy can be created that can be beneficial to all,” the report states.
Here are suggestions:
1) Economists have suggested income tax exemption on interest on Senior Citizen Savings Scheme. “Interest on Senior Citizen Saving Scheme is fully taxable. Feb’20 was outstanding under Senior Citizen Saving Scheme ₹73,725 crore Rs. If the amount is given up to full tax exemption / limit then it will have nominal effect on the public exchequer. “
2) The report also states that “serious consideration can be given to whether the interest rates offered on deposits in India are linked to an age-wise interest rate structure”.
3) Third, “PPF is a government-backed, zero-default risk, long-term small savings plan equivalent to quasi-floating rate deposits intended to provide retirement protection to self-employed individuals and workers in unorganized sectors. Savings schemes. The rates are adjusted every quarter, the government should ideally remove the 15-year lock-in period for PPF and give investors the option to withdraw their money within the stipulated time with some sort of disinclination. needed! “