The government has made a big cut in the interest rate on small savings schemes. For the first quarter (April-June) of the financial year 2020-21, the interest rate received on these schemes has been reduced. The reduction ranges from 0.70% to 1.4%. The interest rate on PPF has been cut by 0.8%, while the interest rate on Post Office Time Deposit (Post Office Fixed Deposit) has been cut by 1.4%. The interest rate of Sukanya Samriddhi Yojana has been cut by 0.8%.
# Scissors on savings lasted
After the announcement of new rates, PPF (Public Provident Fund) will now get an interest rate of 7.1% as against 7.9% earlier. National Savings Schemes (NSC) will now get 6.8% interest, whereas earlier it was getting interest of 7.9%. On the National Saving Certificate, a big cut of 1.10 percent has been made in the interest rate.
This is nothing short of a shock for those senior citizens who depend on the amount of interest they get as a regular source of income.
Apart from this, the interest rate on investment in Sukanya Samriddhi Yojana has been reduced from 8.4 percent to 7.6 percent. This plan has been cut by 0.8 percent. For a long time, there were speculations that the government could reduce the interest rate on small savings schemes. Not only this, farmers will also get less interest on savings now. The interest rate on Kisan Vikas Patra has been reduced by 0.70 percent to 6.9 percent.
# Now these are the interest rates in small savings schemes
Public Provident Fund: 7.1%
Sukanya Samriddhi Yojana: 7.6%
Senior Citizen Savings Scheme: 7.4%
National Savings Letter: 6.8%
Kisan Vikas Patra: 6.9%
Post office time deposit for 5 years: 6.7%
In the small savings scheme, the interest rate is decided by the government every quarter. The formula for determining the interest rate of the small savings scheme was given by Shyamala Committee. The committee suggested that the interest rate on various schemes should be 0.25 percent to 1 percent higher than government bonds with the same maturity period.