Reduced rates for small savings a severe blow to middle class: Chidambaram

Senior Congress leader P Chidambaram on Monday slammed the Narendra Modi government for reducing the interest rates for small savings instruments and scrapping the 8 per cent Government Savings Bonds, saying the move was a "severe blow" to the middle class.

In a series of tweets, the former Union finance and home minister said the government has reduced interest rates for small savings instruments and discontinued 8 per cent taxable bonds.

Chidambaram said inflation is rising, which is a double whammy for the middle class.

Chidambaram wondered whether the government has been pushing people into the stock market and mutual funds.

"For whose benefit? Government has a duty to explain. Government owes a duty to provide its citizens one safe and risk free instrument for savings. Taking the only instrument away is a deplorable act," he tweeted.

After reducing interest rates periodically on small savings and fixed deposits, the government has announced discontinuation of the "8 per cent GoI Saving Bonds", considered to be a lifeline for salaried class and retired citizens.

These bonds will cease for subscription from Tuesday, January 2, the finance ministry said in a statement.

Introduced in 2003, the 8 per cent Government of India Saving Bonds had become popular among fixed-income class since last year when the government started lowering interest rates on fixed deposits small saving instruments such as public provident fund, post office deposits, Kisan Vikas Patras and others.

Earlier in the day, while wishing people on the New Year, the former finance minister also said, "My thought for 2018: May politics in 2018 be inclusive and worthy of the great country that we aspire to be. And may that politics drive economics.