Government cuts rates on small savings instruments
- The Centre has sharply slashed the rates on all small savings instruments for the first quarter of 2021-22.
- The rate of return on the Public Provident Fund down from 7.1% to 6.4% and effecting cuts ranging from 40 basis points (0.4%) to 110 basis points (1.1%).
- Government is keen to lower interest rates to make it easier to execute its borrowing plans for the year and spur growth.
- High small savings rates have been cited by the central bank as a major impediment in ensuring policy rate cuts get transmitted into the banking system.
Source: The Hindu.