The All-India Senior Citizens’ Confederation has urged the Finance Minister to extend the time for senior citizens to invest in the Pradhan Mantri Vaya Vandana Yojana (PMVVY) — a scheme operated by LIC that provides assured pension income to senior citizens at about 8 per cent annually for 10 years. This is a valid demand, and there is a strong case for extending the deadline. The PMVVY, operational since mid-2017, closed on March 31, 2020. But in the run-up to the deadline, the lockdown across the country due to the coronavirus outbreak would have prevented many senior citizens from making the investment in the PMVVY.

The last date, therefore, must be extended from March 31 to June 30, similar to what the Centre has already announced for investments in various tax-saving instruments under Section 80C of the Income Tax Act (PPF, NSC, life insurance premiums, etc), Section 80D (health insurance premiums) and Section 80G (donations), for FY20. When the time for all these schemes can be extended, there is no reason why the date for PMVVY cannot as well.

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The extension of time for investing in the PMVVY is all the more important, because rates on small savings schemes including the Senior Citizen Savings Scheme (SCSS) have been slashed in the latest quarterly reset for April-June 2020. The SCSS now earns 7.4 per cent compared with the earlier 8.6 per cent — a sharp cut of 1.2 percentage points. Deposit rates offered by many banks have also been cut sharply. These rates are unlikely to increase anytime soon, given the low interest rate trend in the economy.

Senior citizens depend a great deal on interest income, and the sharp cut in rates on the SCSS and bank fixed deposits will certainly hurt many in this vulnerable section of society — especially given the high inflation in medical costs. Senior citizens deserve another chance to invest in a safe, relatively high-yield instrument that will help them tide over tough times. The PMVVY fits the bill.

The writer is Deputy Editor with BusinessLine