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Loan realisation from the scheme doubtful

Our Bureau

Thiruvananthapuram, July 3

The Kerala Government’s ways and means financial situation is facing hard times due to a negative trend in the National Savings Scheme.

The NSS has an important role in the State’s finances and the budget for 2007-08 has projected a loan of Rs 2,700 crore from the scheme. But going by the trend so far, the State would not be able to get anything on this account, the Finance Minister, Dr Thomas Isaac, said here on Tuesday.

He said that in April and May, a total deposit of Rs 625.9 crore was mobilised, while the withdrawals during these months amounted to Rs 669.29 crore. So, the net deposit under the scheme was Rs 43.39 crore on the negative side.

The trend was visible during the last year also. The net deposit target for 2006-07 under the scheme was Rs 2,950 crore. However, the total deposit was Rs 4,784 crore and net deposit Rs 986.62 crore. This was only 33 per cent of the target, Dr Isaac said.

He pointed out that a reasonably high interest rate and relief in taxation had been the factors that attracted investors to the NSS in the earlier years. But certain conditions and restrictions introduced by the Centre had adversely affected deposit mobilisation under the scheme.

For one, the Centre had banned deposits in the scheme by institutions such as welfare boards, trusts and cooperative societies. Also, the 10 per cent bonus under the monthly income scheme, the most attractive part of the savings scheme, was stopped from March 13, 2005.

Besides, the income tax relief given to fixed deposits in banks had led to a decline in deposits under the savings scheme. Earlier, the tax relief was available only to a few schemes such as deposits in National Savings Certificates and Public Provident Fund.

The Centre should effect changes in these, and other terms and conditions incorporated of late in order to protect the scheme, the Minister said.

More Stories on : Small Savings | Kerala

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