Special measures needed to save Small Savings Schemes
Monetary policy measures to tackle the Covid crisis will result in lower income for many retirees. These people need a special deal.
The reduction in earning of such people is enormous. What looks like a 1% drop in the interest rate could actually be a 15% reduction in the income of the saver. For example, if you have a ₹20 lakh in your Monthly Income Account, you were getting an annual interest of ₹1.52 lakh. Now, this comes down to ₹1.32 lakh, a reduction of 13.2%. The worst impact is on one-year term deposit, where the amount you earn has gone down by more than 20%.
Even though the monetary policy logic of lowering these rates sounds fine, some special provision is needed in the current situation for small savings schemes, especially in those for senior citizens and the girl child. These schemes have a specific social purpose and utility. The government spends a lot of money on a lot of things, many of them useless. A small extra outgo of interest on such schemes should be seen as a social expenditure rather than some great anomaly in the monetary policy being followed.
We request Local Circles to take up this issue with PM.
The reduction in earning of such people is enormous. What looks like a 1% drop in the interest rate could actually be a 15% reduction in the income of the saver. For example, if you have a ₹20 lakh in your Monthly Income Account, you were getting an annual interest of ₹1.52 lakh. Now, this comes down to ₹1.32 lakh, a reduction of 13.2%. The worst impact is on one-year term deposit, where the amount you earn has gone down by more than 20%.
Even though the monetary policy logic of lowering these rates sounds fine, some special provision is needed in the current situation for small savings schemes, especially in those for senior citizens and the girl child. These schemes have a specific social purpose and utility. The government spends a lot of money on a lot of things, many of them useless. A small extra outgo of interest on such schemes should be seen as a social expenditure rather than some great anomaly in the monetary policy being followed.
We request Local Circles to take up this issue with PM.
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Yes, Government should review the monetary policy of interest on FDs, SCSS Deposits, etc for Senior Citizens. There is a considerable reduction in return as interest. As I understand, the current FD rates give to a maximum of 6% p.a. payable quarterly. PPF interest rates are also reduced, now and then.... Senior Citizens specially non pensioner who solely depend on interest on FDs, SCSS are the biggest losers.... Gradual withdrawal from the FDs principal amount to make up monthly cash flow requirements, has the exponential effect on the return on FDs interest.....
Apr 13
When payment of additional interest to senior citizens was introduced, it was 1% in addition to the applicable rates. Gradually it has been reduced to present 1/2% p.a. Since last two years or so the interest rates on bank deposits have sharply declined due to reduction in banks rates by RBI during this time on several occasions. Therefore, the government should sympathetically consider the plight of those worst affected who are fully dependent on interest income and introduce a system of adequate compensation to this category of people.
Apr 12
Senior Citizens specially non pensioner who solely depend on interest and mutual fund dividend are the biggest hit in the present sceneiory. PM and other concerned authority should look in to this aspect so that they can have a reasonable life under the present inflationary atmosphere.It has been established that average inflation in India is 7% minimum and that has to be compensated.
Apr 12
In the name of providing relief to the borrowers, banks are playing with the sentiments of depositors. When FDR rate is reduce by say 1% senior citizens are hit hard, EMI of small borrowers is reduced by about Rs 50, per Lakh, and real benefit goes to industrial houses.
Apr 09
The present government policies are to appease the business community, but there is no incentive for the depositors, more particularly for Sr. Citizens. The small savings schemes have already lost its charm. Days may not be far off, when the depositors of money may be asked to pay interest for safe keeping of the money in the banks. As a prelude, recently, SBI has already reduced the interest rate.
Apr 08
