Smalls savings interest cut: Does it affect NRIs?

SourceKhaleej Times
SectorEconomy
CountryGulf

The word oversight, which by no means is an esoteric word, assumed a very complicated and sinister meaning last week. Indian finance ministry authorities sprang a surprise by announcing a drastic cut in interest rates for small savings on March 31 in the middle of a very high-decibel election campaign for some provincial legislatures. This could have been very costly for the ruling Bharatiya Janata Party which mounted a big effort to seize power in these states. In a bid to limit any damage, embattled Finance Minister Nirmala Sitharaman quickly pulled back the order by saying it was issued due to ‘oversight’. What are these small savings? These are deposits collected by Indian post-offices spread across the length and breadth of the country from low-earning and retired persons at an interest rate higher than those offered by banks. The principal and the interest are exempted from income tax.

The private provident fund (PPF), meant for retirement savings, is also part of this bouquet of schemes. The PPF is an investment vehicle where each person can contribute a maximum of Rs150,000 per financial year and those funds are locked for a ...read more...