Small Savings Small Cut

June 3, 2017

After staying put in the March quarter, the government has finally cut rates on small savings schemes offered by the post office in the April-June 2017 quarter.

A rate cut was overdue. G-Sec yields, to which post office schemes rates have been linked , are down sharply over the past year. Even so, the government has been kind.

The quantum of the latest rate cut- just 0.1 percentage point accross small savings schemes except post office savings accounts – has been mild. The government going by its formula to fix these rates, had the leeway to wield the knife more forcefully.

So, the PPF and NSC will now get 7.9 per cent, while the Sukanya Samriddhi and Senior Citizens Schemes will get 8.4 per cent. Five year bank deposits will now get 7.7 per cent still better than what bank currently offers on their long term fixed deposits. Net -net , sall savings schemes retain their edge, despite the marginal the marginal blunting.