Tweak the formula for small savings rates
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There’s a need to de-link the small savings rates from the G-Sec market. Also, the setting period needs reconsideration
The announcement relating to further lowering of the small savings rate did come as a shock to those who depend on fixed income for a living. This would have been a double-whammy as rates were lowered by 70-140 basis points (bps) last year and the new cuts were in the range of 90-110 bps.
This has been withdrawn which is good, but the reasons are unclear. This is important because if the withdrawal is due to the ongoing State elections there is a good chance that it could be invoked post July1 (this is often done for fuel prices when elections are on). Hence there is need to introspect.