Political, public outcry as PPF, NSS and saving scheme rates cut

New Delhi In a decision that evoked immediate uproar by the salaried and selfemployed class the government on Friday slashed the interest rates on public provident fund PPF from 87 percent to 81 percent soon after retracting the unpopular proposal to partially tax withdrawalsIn the process the interest rate for the national savings scheme was also reduced sharply from 85 percent to 81 percent for Kisan Vikas Patra KVP from 87 percent to 78 percent and for fiveyear recurring deposit to 74 percent from 84 percent Even the girl child scheme Sukanya Samridhhi Account SSA was not spared The cut From 92 percent to 86 percentThe new rates will be effective from next fiscal April 1 2016 The interest will be calculated on quarterly basis AK Chauhan joint director in National Savings Institute NSI told IANS According to him the main reason for the downward revision was the two year yield on government securities GSec had gone downThe interest rates for various small savings schemes were recalculated with reference to the GSec yields of equivalent maturity for the period December 2015February 2016 and based on it rates on various schemes for 201617s first quarter have been notifiedAccording to the government the quarterly revision of interest rates will ensure that the interest rates under small savings schemes are more dynamically related to current market rates thereby enabling the banks to move their interest rates in line with current money market ratesChauhan said the total corpus of all small savings scheme was around Rs300000 crore The net accretion this year was around Rs65000 crore till January 31 The SSA has around 85 lakh accounts with a deposit of around Rs3500 crore while the KVP corpus is over Rs21000 crore Chauhan saidEarlier the government had proposed a tax on 60 percent of the PPF corpus on maturity if it was not invested in annuities that is schemes that fetch periodic returns Also proposed was a limit on monetary contributions of employers in provident fund to Rs150000 per annum for tax sopsBoth these were withdrawn The government also cut interest rates on other small savings term deposit schemes The small savings interest rates are perceived to limit the banking sectors ability to lower deposit rates in response to the Reserve Bank of Indias monetary policy the government said last monthInterestingly the rate of interest on the Employees Provident Fund EPF is 88 percent The selfemployed are hit by this move For them the PPF is the one safe mode of investment Now the return has come down NVaradarajan a selfemployed person told IANS Meanwhile the decision led to a big public outcry on microblogging site TwitterBleed the ones who pay tax This ppf rate cut by Modi government is so not on Anti national tweeted Vijaita Singh Sharing similar sentiments another netsavvy citizen Sudhanshu S Singh tweeted Whats this Interest rate on PPF has been cut to 81 Where should common people invest for safe earningSagar Kumar Jain took a potshot at Prime Minister Narendra Modis government tweeting Modiji has to offer something to common man everyday PPF interest rate cut drastically Difficult to see Lotus in assembly post 2019 Some of the postings were especially directed against Finance Minister Arun JaitleyEPF tax or PPF interest Why is Arun Jaitley anticommon man Being a billionaire he cant understand poverty went an equally angry tweet from Bharatha10 The opposition also opposed the governments decision Governments decision to cut PF interest rates is unfortunateWhy are they taking away one of the last avenues of savings in a depressed economy Congress leader Ahmed Patel tweetedParty spokesperson Randeep Singh Surjewala in a statement said It is a criminal breach of trust with hapless people who put their money in the custody of the government of India with the belief that they will not be cheatedCommunist Party of IndiaMarxist CPIM general secretary Sitaram Yechury also hit out tweeting Small savers are the backbone of our savings With no social security net they rely on such guaranteed returnsEconomist Ashwaini Mahajan also the coconvenor of Swadesh Jagran Manch also criticised the move saying it will leave an adverse impact on the domestic saving As a student of economics I feel the authorities must reconsider about the decision I do not think there was enough and good ground at the moment to slash the interest rate on the PPF Mahajan told IANS