Small savers who had set much store on the 8 per cent GoI Savings (Taxable) Bonds, 2003, to maximise the returns on their savings in the current falling interest rate regime, are in for disappointment.
The government has decided to stop selling these bonds from Tuesday (effective close of banking business), putting out of reach of the common man an attractive savings instrument, albeit a taxable one.
“The Government of India (GoI) announced that 8 per cent GoI Savings (Taxable) Bonds, 2003, shall cease for subscription with effect from the close of banking business on Tuesday, January 2,” an official release said.
This comes at a time when fixed deposits rates in the country have been falling in the recent months. The return on Public Provident Fund has also been adjusted downwards, putting pressure on the small savers and the salaried class.
Reacting to the Government’s decision, former Finance Minister P Chidambaram tweeted: “A severe blow to the middle class. How will the risk-averse citizen save? Is the Government pushing people into the stock market and mutual funds?”