Indian Finance Minister Nirmala Sitharaman on Thursday withdrew a federal order on cutting interest rates for small-time savers invested in federal savings schemes, barely 12 hours after a government circular ordered the cut. It was one of the steepest cuts in recent history.
Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021.— Nirmala Sitharaman (@nsitharaman) April 1, 2021
Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India
In an official notification on Wednesday, the federal Finance Ministry slashed interest rates on small saving schemes, such as the National Savings Certificate and the Public Provident Fund (PPF) among others, for the April-June 2021 financial quarter.
"In exercise of the powers conferred by Rule 9(1) of the Government Savings Promotion General Rules, 2018 the rates of interest on various small savings schemes for the Quarter 1 of FY 2021-22 have been revised", the federal circular said on Wednesday.
The federal department announces interest rates for the small savings plans popular among India's salaried class employees on a quarterly basis.
The interest rate cut ordered on Wednesday ranged between 0.5 percent to 3.5 percent, the steepest rate cut in history.
While the interest for savings scheme PPF was reduced from 7.1 percent to 6.4 percent, that of the NSC was brought down from 6.8 to 5.9 percent. The most significant rate cut was on the one-year fixed term savings plan, whose interest rate was brought down from 5.5 percent to 4.4 percent.
Introduced in 1968, the PPF is geared towards moblising the savings of small time investors and offers income tax benefits, making it hugely popular among the country's middle-class population.
The order on Wednesday witnessed the most significant rate cut on the PPF since 1974, immediately triggering massive public outrage.
Lowest ever PPF rate at 6.4%. Is it good enough to even cover annual inflation? pic.twitter.com/TT0vtexH3m— Anil Swarup (@swarup58) March 31, 2021
Savers are losers— anshuman tiwari (@anshuman1tiwari) March 31, 2021
Unprecedented cut in interest rates on small savings schemes, rates cut by massively between 40 -110 basis points
Interest on PPF hits 46 year low of 6.4%, dips below 7% #savings pic.twitter.com/IFlueJrWJT