Govt withdraws small savings rate cut fearing backslash

Steep cuts on interest rates on small savings schemes, announced last evening, were rolled back by the government today with Finance Minister Nirmala Sitharaman declaring that "orders issued by oversight" would be withdrawn. The cuts in schemes ranging from the National Savings Certificates or NSC and Public Provident Fund or PPF would have hurt millions of middle-class depositors. The rate now will continue to be the same as that was in the last quarter.

"Interest rates of small savings schemes of the government of India shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn," Finance Minister Nirmala Sitharaman tweeted this morning.

Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021.
Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India

— Nirmala Sitharaman (@nsitharaman) April 1, 2021

Last evening, on the last day of the financial year, the government had announced a huge cut in interest rates of up to 1.1 per cent for the first quarter of 2021-22. The interest rate on PPF was reduced from 7.1 per cent to 6.4 per cent. NSC would be down to 5.9 per cent from 6.8 per cent. If implemented, this would have been the second cut in interest rates on small savings within a year. In the April-June quarter of 2020-21, the government had slashed rates of small savings schemes by 0.70-1.4 per cent. (Read: Huge cut in small savings interest. PPF at 40 years lowest interest rate)