A day after the finance ministry announced a reduction in rates on small savings schemes as part of its periodic review, Finance Minister Nirmala Sitharaman was quick to announce a rollback of the move on Thursday morning, calling it an “oversight”.
In a tweet, the FM said: “Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn.”
If the ministry had gone ahead with its plan to lower the rates on small schemes up to 1.1 per cent, it would have been a second cut in two years and brought savings rate on many schemes, such as the Public Provident Fund (PPF), to historic lows. In the April-June quarter of last year, too, the government had cut rates on small savings schemes by up to 1.4 per cent.
The Opposition, meanwhile, has been claiming that the rollback of the rate reduction this time has to do with the ongoing elections in five states, including West Bengal. An analysis of data shows that West Bengal has the highest share in contributions made to the National Small Saving Fund (NSSF).
According to the latest available data (2017-18), West Bengal accounts for 15 per cent of the total gross NSSF contributions. It is second only to Maharashtra, which has a 15 per cent share in terms of net contributions. Tamil Nadu, another state where Assembly polls are taking place, also has a high share of 6.6 per cent in total NSSF contributions.
In fact, a further drill-down shows that West Bengal is one of the few states whose share in India’s total NSSF contributions has been growing. The state accounted for 12.4 per cent of gross NSSF contributions in 2007-08; this increased to 14.1 per cent by 2009-10. Since 2015-16 it has been over 14 per cent. By comparison, Tamil Nadu’s share in NSSF contributions has declined from 6.2 per cent to 4.8 per cent during the same period.
This year (until January), gross contribution to the NSSF across all states was Rs 7 trillion, and net contribution was Rs 2 trillion. These had been Rs 8.5 trillion and Rs 2.8 trillion, respectively, in 2019-20, and Rs 6 trillion and Rs 1.6 trillion in 2017-18.