Interest Rates: Interest rates may increase on small savings schemes, no change for two years

Posted on 24th Jun 2022 by rohit kumar

Interest rates on small savings schemes (SSC) may increase by 0.5 to 0.75 percent from next month. The government will decide on this by the end of this month. With this, more investors can come into these schemes and there will be less need for the government to take additional borrowing to pay higher interest.

 

The interest rates on it have not changed for the last 2 years (April 2020). Aditi Nair, the chief economist of rating agency Icra, said that a decision can be taken to increase the interest rates of these schemes in the second quarter of the current financial year. This is because the interest rates of government securities have gone up.

 

That's why the government will have to pay more interest.

 

ICICI Bank Chief Economist Sameer Narang says that the borrowings that the government takes from the market are at more than 7 percent interest. In such a situation, he will have to pay more interest on small savings schemes. Among small savings schemes, the highest interest is available on Sukanya Samriddhi Yojana, which is 7.6 percent.

 

Interest may increase from 0.5 to 0.75 percent

 

Economists believe that the Finance Ministry can increase the interest rates of these schemes by 0.5 to 0.75 percent from next month. ICICI Bank's Chief Economist Sameer Narang says that the one-year interest of the government's Treasury bill is around 6.23 percent.

 

Also, the borrowings that the government takes from the market are at more than 7 percent interest. In such a situation, he will have to pay more interest on SSC. However, this is also a loan. In such a situation, it is expected that to give returns to investors around the benchmark, it will have to increase the interest on SSC by at least half a percent.

 

Review every quarter

 

The interest rate on small savings schemes is reviewed every quarter. In this review, the main focus will be on the RBI increasing the repo rate to 0.90 percent twice. Banks have increased the interest rates on fixed deposits due to the increase in the repo rate of RBI. With this, the government can also take a similar decision to retain and attract investors in small savings schemes.

 

Highest interest on Sukanya Samriddhi

 

Among small savings schemes, the highest interest is available on Sukanya Samriddhi Yojana, which is 7.6 percent. Interest is getting 7.1 percent on Public Provident Fund, 6.8 percent on National Savings Certificate, 7.4 percent on Senior Citizen Tax Savings, and 6.9 percent on Kisan Vikas Patra. These are all long-term plans.

 

The economic growth rate will remain up to 7.8% even after challenges

 

India's growth rate can be 7-7.8% in the current financial year amid global challenges. Strengthening the rural economy due to better agricultural production will support the growth rate. NR Bhanumurthy, Vice-Chancellor, BR Ambedkar School of Economics, said, "The global inflationary pressures and the Russia-Ukraine war pose risks to the economy.

 

However, the economic fundamentals are strong at the domestic level. Nagesh Kumar, Director, Institute of Industrial Development Studies said, "GST collection, exports, PMI, etc all point towards a strong growth rate in 2022-23. French economist Guy Sorman said workers are returning from the city to the villages. This will increase agricultural production and food grains exports.

 

Also Read: RBI Governor Shaktikanta Das said inflation is the biggest concern for the economy