With three successive pauses in policy repo rates, the interest rates on key small savings schemes such as Public Provident Fund (PPF), National Savings Certificates (NSC) and Senior Citizens Savings schemes have been kept unchanged for three months starting October 1.
However, there is tweaking in the interest rate on just one scheme, and that is the 5-year recurring deposit for which the rate has been revised upward by 20 basis points to 6.7 per cent. This is the fifth successive quarter of selective change in small savings schemes, which collectively have a subscriber base of more than 40 crore.
The interest rate on the National Savings Certificate (NSC) remained unchanged at 7.7 per cent from October 1 to December 31, 2023. The rate for the girl child savings scheme Sukanya Samriddhi, too, stood at the existing level of 8 per cent. The interest rate on the senior citizen savings scheme and Kisan Vikas Patra (KVP) is 8.2 per cent and 7.5 per cent, respectively.
The government aims to issue securities worth more than ₹4.71-lakh crore against small savings this fiscal, as a source to bridge the fiscal deficit. For FY23, it was around ₹4.39-lakh crore. The small savings schemes basket comprises 12 instruments, including the National Saving Certificate (NSC), Public Provident Fund (PPF), Kisan Vikas Patra (KVP) and Sukanya Samridihi Scheme. The government resets the interest rate at the beginning of every quarter.
Theoretically, since 2016, interest rate resetting has been done based on yields of government securities of corresponding maturity with some spread on the scheme for senior citizens, as advised by the Shyamala Gopinath Committee. However, in practice, the interest rate changes are made considering several other factors, including political ones.