The government on Friday kept interest rates on small savings schemes, including NSC and PPF, unchanged for the fourth quarter of 2021-22 amid rising cases of the more contagious coronavirus variant Omicron and elevated level of inflation.
The decision also comes ahead of assembly elections in five states — Uttar Pradesh, Uttarakhand, Punjab, Himachal Pradesh and Goa. The schedule of elections is expected to be announced early next month.
Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1 per cent and 6.8 per cent, respectively, in the fourth quarter as well.
“The rates of interest on various small savings schemes for the third quarter of the financial year 2021-22 starting from January 1, 2022, and ending on March 31, 2022, shall remain unchanged from the current rates applicable for the third quarter (October 1, 2021 to December 31, 2021) for FY 2021-22,” the finance ministry said in a notification.
According to analysts, the government has kept rates intact in view of upcoming assembly elections in five states.
Uttar Pradesh is the second highest contributor to the small savings scheme after West Bengal. Earlier this year, during the West Bengal assembly polls, the Centre decided to reduce the interest rate. But the finance ministry swiftly revoked a steep interest rate cut of up to 1.1 per cent for the first quarter on small savings schemes, citing oversight.
As a result, the first quarter rates were retained at the level of the fourth quarter of the last financial year. The cut was touted as the steepest cut in many decades. Interest rates for small savings schemes are notified on a quarterly basis.
One-year term deposit scheme will continue to earn an interest rate of 5.5 per cent during the second quarter of the current fiscal, while the girl child savings scheme Sukanya Samriddhi Yojana account will earn 7.6 per cent.
The interest rate on the five-year senior citizens savings scheme would be retained at 7.4 per cent. The interest on the senior citizens’ scheme is paid quarterly. Interest rate on savings deposits will continue to be four per cent per annum.
Term deposits of one to five years will fetch an interest rate in the range of 5.5-6.7 per cent, to be paid quarterly, while the interest rate on five-year recurring deposits will earn a higher interest of 5.8 per cent.