Senior citizens scheme sees investment of over Rs 10,000 crore in April

The interest rate for SCSS was increased to 8.2% from 8%, and that of the monthly income scheme was increased to 7.4% from 7.1%

The government’s decision to expand the upper limit of the Senior Citizens Savings Scheme (SCSS) and hike the interest rate appears to have worked, with the scheme having garnered upwards of Rs 10,000 crore in April, the first month of financial year 2023-24 (FY24), Business Standard has learnt. This is more than three times the amount the scheme received in previous years.

“We are seeing a bonanza and have got a very good report in the first month of the expanded senior citizen scheme. It was in excess of Rs 10,000 crore. Normally in the past, for the first month, we have had around Rs 3,000 crore,” a top official said.

Union Finance Minister Nirmala Sitharaman in her Budget speech increased the maximum deposit limit for SCSS to Rs 30 lakh from Rs 15 lakh and for Monthly Income Account Scheme to Rs 9 lakh from Rs 4.5 lakh for single accounts and to Rs 15 lakh from Rs 9 lakh for joint accounts.

She had also announced a one-time new small savings scheme, Mahila Samman Savings Certificate, that would be made available for a two-year period up to March 2025. “This will offer deposit facility upto Rs 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option.”

Additionally, the Centre hiked the interest rate for a number of small savings schemes for the June quarter. The interest rate for SCSS was increased to 8.2 per cent from 8 per cent, and that of the monthly income scheme was increased to 7.4 per cent from 7.1 per cent.

The official quoted above said that data was still awaited on the performance of the monthly income account scheme, but the response was expected to be good. “We are also telling the banks to operationalise the Mahila Samman scheme as quickly as possible. The post offices have already operationalised it,” the person said.

The official added that there are always more new investments by citizens in small savings schemes at the beginning of a financial year. One can always argue that Rs 10,000 crore may not be had in the subsequent months. But whatever we get, it should be healthy figures,” the official said.

A good inflow of investment into the National Small Savings Fund (NSSF) bodes well for the Centre as it is the second largest source of financing the fiscal deficit, the shortfall between the sovereign’s revenue and expenditure. The largest source of financing the deficit is the amount the centre borrows from the debt markets. The net market borrowing for FY24 stands at Rs 11.88 trillion.

For the NSSF, the Centre expects net receipts – or the amount out of the total NSSF corpus that will be used to finance the deficit – of Rs 4.71 trillion, as per Budget documents. “We expect to meet that target,” the official said. The opening balance of NSSF, as on April 1, was Rs 27.69 trillion.

Top officials including Economic Affairs Secretary Ajay Seth have said that the Centre is unlikely to increase its borrowing plans for the current fiscal year, thus expressing confidence that the fiscal deficit target of 5.9 per cent of GDP will be met, in spite of global macroeconomic headwinds.