How NSSF could morph from a rainy-day fund into a huge burden for the govt

Costlier loans from NSSF, at 7.4% interest rate, will occupy more than 10% share in govt's outstanding public debt soon, all to give the small saver a higher interest rate than the market

Small savings instruments such as post office deposits and public provident fund, the preferred fixed-income avenues for the middle class and low-income households, have now blown up to start becoming a burden on the government’s coffers. 

The Central government’s interest payments towards the National Small Savings Fund will rise 12-fold in six years-- from a paltry Rs 4,900 crore in FY16 to close to the budgeted Rs 60,000 crore in FY22. Though enhanced borrowing will entail higher interest payments anyway, replacing market borrowing by NSSF loans is likely to demand Rs 7,500 crore more, a Business Standard calculation shows. 

But