Government withdraws order on rate cut on small savings schemes

This is the first time that the Centre has scrapped the notified interest rates on small savings schemes after switching to a quarterly interest rate setting system in April 2016.

Hours after in small savings instruments’ returns for this quarter, the government has backtracked on these sharp cuts. This is the first time that the Centre has scrapped the notified interest rates on small savings schemes after switching to a quarterly interest rate setting system in April 2016. The government appears to have had a rethink owing to a sharp backlash on social media about the middle class being squeezed. Retail inflation has been breaching the 6% mark and the government has also decided to tax Employees PF savings starting this year. “Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” Finance Minister Nirmala Sitharaman said in a tweet early Thursday morning.