The government has announced that interest on savings deposits would be reduced from 4% to 3.5 percent a year and that the Public Provident Fund, or PPF, will be reduced from 7.1 percent to 6.4 percent.
National Savings Certificates (NSC) will receive 5.9% interest starting April 1st, while the Sukanya Samriddhi Yojana will earn 6.9% interest.
The five-year Senior Citizens Savings Scheme interest rate has been reduced to 6.5 percent. The interest on the senior citizens’ plan is paid out every three months. The Kisan Vikas Patra (KVP) interest rate has been reduced to 6.2 percent.
The interest rate on savings deposits at the post office has been lowered to 3.5 percent. Term deposits of one to five years, on the other hand, would have a quarterly interest rate of 4.4-5.1 percent, while the interest rate on a five-year recurring loan will be 5.8 percent.
According to analysts, the government tends to rely on modest savings to finance its fiscal deficit. SBI economists had previously reported in a report that “financing from small savings is pegged at a substantial 3.9 lakh crore or 26 percent of the fiscal deficit for FY22.”
The government cut interest rates on small savings schemes by up to 140 basis points in the April-June quarter of last year, and they have remained unchanged since then. Small savings plan interest rates have been slashed by a range of 120-250 basis points this financial year as a result of this cut.
The deadline for connecting the Permanent Account Number (PAN) to Aadhaar was also extended by three months by the finance ministry.
“In light of the difficulties resulting from the COVID-19 pandemic, the Central Government has extended the last date for linkage of Aadhaar number with PAN from 31st March, 2021 to 30th June, 2021,” the Income Tax Department tweeted.
In the last year, the government has cut interest rates on small savings accounts for the second time. The government cut small savings scheme rates by 70-140 basis points (100 basis points = 1%) in the April-June quarter of 2020-21.