Special measures needed to save Small Savings Schemes
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. more