Small savings schemes may see lower rates in next fiscal year

NEW DELHI: With RBI cutting policy rates for the first time in five years, govt is set to lower rates on small savings schemes, such as Public Provident Fund (PPF), during the next financial year.

While the next review, covering the April-June quarter, is due on March 31, the finance ministry may not go for an immediate cut as the transmission of the lower rate regime is expected to take a few months and banks typically mop up deposits during the fourth quarter of the financial year.

"This is the best time to put money in deposits. At some point next year, even small savings rates will come down," said a source. Govt sources said that schemes such as PPF remain attractive as they come with tax benefits along with compounding effect.

During next fiscal, the Centre has budgeted for net small savings of Rs 3.4 lakh crore, compared with Rs 4.1 lakh crore in the revised estimate for this year. Govt has budgeted for refunds of Rs 20,000 crore or so under the Mahila Samman scheme, which is to end in March. Currently, PPF fetches 7.1% and Sukanya Samriddhi Yojana 8.2% returns.


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