Two decades later, small savings return to haunt the Centre

This means, in FY18, govt to pay a disproportionately high interest for borrowings from such savings

To keep the pensioners’ lobby happy, the Centre seems to have taken a retrograde step to manage its borrowings in FY18. It has decided to cut down on cheaper borrowings from the market to instead pick up costlier money from the high-cost National Small Savings Fund (NSSF). This will mean, in FY18, the Centre will pay out a disproportionately high interest for its smaller amount of borrowings.  

But the Centre has factored the financial cost, as a necessary political one. In the process, it has overturned a nearly two-decade-long process of reforms in the management of public debt. It