Dada-Dadi bond launch deferred

Senior citizens will have to wait a little longer for the Dada-Dadi bonds. The finance ministry, which had originally planned to notify the scheme by April 1, has decided to postpone it by two months.

Expenditure Secretary D Swarup said the Rakesh Mohan committee on re-aligning the interest rates on small-savings instruments would submit its report on May 31.

"We cannot decide on the interest rate to be offered on the Dada-Dadi bonds in isolation," he said.

Swarup also said the interest rates on small savings would be reviewed when a full Budget was presented.

When asked if the launch of the Dada-Dadi bonds was being deferred keeping in mind the code of conduct for the elections, Swarup said the scheme had been announced much before a decision on elections was taken.

Finance Minister Jaswant Singh had announced the Dada-Dadi bonds for senior citizens in January this year. The bonds, he had said, would be launched on April 1 and would offer an attractive interest rate, higher than the market rates.

While the small-savings instruments offer an average 8 per cent return with tax incentives, the Life Insurance Corporation's Varishta Bima Yojana offers an annualised yield of 9 per cent.

The Rakesh Mohan committee would study the rates on all small-savings instruments and the Varishta Bima Yojana.

"The committee needed more time to finalise its views on the restructuring of small-savings schemes," Swarup said.

In the past three years since the YV Reddy committee submitted its report on small savings, the scenario had changed, he pointed out.

While the Employees Provident Fund was the most popular scheme two years ago, the Post Office Monthly Income Scheme has overtaken it in popularity now.