BY SUBHASH CHANDRA AGRAWAL
Latest data released by Reserve Bank of India (RBI) shows a sharp decline in small savings in first eight months of the financial year 2017-18 when small savings schemes amounted to just rupees 40,429 crore, a seven-fold dip from Rs 2,75,682 crore in the corresponding period of the previous year. Evidently, it is at cost of more investment in mutual-fund schemes where political and other factors can suddenly harm the investors like happened in investment in properties.
A sharp decline in interest-rate was anticipated post-demonetisation when Jeevan Akshay pension-plan of LIC of India for the reason witnessed maximum investment in that period. But with currency-circulation crossing what it was before demonetisation, reduced interest-rate in government savings-schemes should be restored with total overhaul, rationalisation and simplification.
An exclusive long-term government saving-scheme to be available in all branches of public-sector banks and post-offices should be introduced with an annual interest rate of eight per cent where interest may be auto-credited for senior citizens on monthly basis. For others, auto-credit of interest may be on annual basis. Deposits under this scheme should be exempted under section 80-C of Income Tax Act. Other savings-schemes and pension-plans including RBI-bonds, Senior Citizens Savings Scheme and Pradhan Mantr Vaya Vandana Yojna can then be discontinued. Other special savings-schemes like Public-Provident-Fund PPF should also attract eight-percent annual interest-rate. There must be uniformity in interest-rates for deposits and loans for all public-sector banks.