To boost saving, rates on small saving schemes may not be slashed sharply

Government may not sharply cut interest rates on small saving schemes as it would negatively affect deposits affecting the growth in GDP

Zee Media Bureau

New Delhi: Government may not drastically reduce interest rate on small saving schemes over fears that any sharp cut in the rates may bog down the saving rate.

Small saving schemes such as Public Provident Fund, National Saving Certificate, Kisan Vikas Patra, Senior Citizen Scheme, and Sukanya Samridhi Scheme, fetch a high average interest rate of 8.7-9 percent.

According to a report in Hindustan Times, reduction in deposit will be detrimental to government's attempts to boost India's saving rate, which is the key to GDP growth.

The report further said the rates will not be cut across the small schemes or brought in line with the bank rates. It said that that government is reviewing interest rate on individual schemes as per its performance and demand in the market.