Coming, revamped Kisan Vikas Patra, new savings scheme for girl child

Our Bureau New Delhi | Updated on November 25, 2017

Bid to give more incentives to savers through tax benefits, attain higher savings rate

Two more small saving instruments — the revamped Kisan Vikas Patra and a scheme for the girl child — will be launched soon.

Under the schemes, the Government will guarantee the principal amount and interest to investors. The Finance Ministry is discussing ways to incentivise savers through tax benefits, similar to National Saving Certificates, Public Provident Fund, life insurance policies and Equity-Linked Saving Scheme.

“We are re-launching the Kisan Vikas Patra in a couple of days. This saving instrument was a huge success and we could mobilise up to ₹60,000 crore a year,” Rajat Bhargawa, Joint Secretary (Budget) in the Finance Ministry, said while addressing the International Cross Regional Conference on Increasing Financial Outreach of the Youth Population here on Tuesday.

Popular scheme

The Kisan Vikas Patra was a popular saving scheme in the 80s and 90s with an assurance of the invested amount being doubled in 100 months. However, the scheme was discontinued with effect from December 1, 2011, following the Shyamala Gopinath report which alleged that the scheme was used for money laundering.

The effort now will be to bring in more safeguards and higher lock-in time in the revised scheme.

The interest rate on the revamped scheme will be higher than other saving instruments, such as NSC, where the rate is 8.5 per cent for five-year maturity.

Finance Minister Arun Jaitley, in his Budget speech on July 10, had said that Kisan Vikas Patra was a very popular instrument among small savers.

Jaitley had also said that a special small savings instrument for girl children catering specifically for their education and marriage expenses would be announced. Keeping this in mind, Expenditure Secretary Ratan Watal said, “A special scheme for the girl child will be shortly announced by the Government to address gender imbalances in the saving spectrum. Similarly, a scheme with insurance cover is also being worked out.”

Contribution to GDP

He said the domestic savings rate, which had declined during the past few years, was now recovering, thanks to these savings schemes. We expect to attain higher saving rates, he added. Currently, the household savings rate as a percentage of GDP is around 30 per cent.

Published on October 28, 2014

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