New Delhi: In a major relief to the common man, the Modi Government has withdrawn the rate cut order on the Small Savings Schemes. 

In a brief message on Twitter, Union Finance Minister Nirmala Sitharaman said, “Interest rates of Small Savings Schemes of the Government shall continue to be at the rates which existed in the last quarter of 2020-2021. That is, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn.” 

The Government yesterday cut interest rates on Small Savings Schemes, including National Savings Certificate (NSC) and Public Provident Fund (PPF), by up to 1.1 percent for the first quarter of 2021-22 in line with falling fixed deposit rates of banks. The interest rate on PPF was reduced by 0.7 percent to 6.4 percent while the rate on NSC was cut from 6.8 to 5.9 percent.

After the move, the new interest rate on PPF went down to its lowest level since 1974. Reports said that the PPF interest rate was 7 percent between August 1974 and March 1975. Prior to that, the rate was 5.8 percent. Interest rates for small savings schemes are notified on a quarterly basis.

The steepest fall of 1.1 percent was effected in the one-year term deposit. The new rate stood at 4.4 percent from the earlier 5.5 percent. While announcing the quarterly setting of interest rates in 2016, the Finance Ministry had said that rates of small savings schemes would be linked to Government bond yields.

Last month, the Reserve Bank of India kept interest rates static for the fourth time in a row at 4 percent on inflationary concerns.