Image Courtesy: businessinsider nytimes
The government of India on Friday has slashed interest rates on small saving schemes including the Public Provident Fund (PPF). The new interest rate on PPF will be cut to 8.1 per cent from the earlier 8.7 per cent for the period April 1 to June 30. The rates will now be reset every quarter to closely align them with the market rates.
Some of the other schemes where interest rate of returns have been slashed are
The Sukanya Samriddhi Yojana (SSY), also known as girl child prosperity scheme is launched by Prime Minister Narendra Modi. SSY account is to ensure a bright future for girl children in India. This yojana is to facilitate them proper education and carefree marriage expenses. The scheme has well been accepted by the masses in wake of the financial security and independence it would provide to the girl child as well as their parents and guardians.
Senior Citizens savings scheme – Term Deposit Rates for 1 yr, 2yr, 3yr and 5 yr.
What is Public Provident Fund?
Public Provident Fund is a statutory scheme by the government to provide old age income security to self-employed individuals and workers from unorganized sectors. In PPF, the contribution made by an individual would be credited to Government’s account which will be used for various Government projects. It is a long term investment option that mobilizes small savings while providing decent rate of returns. For PPF, an individual does not have to be a salaried employee. It cannot be withdrawn without a minimum tenure of 15 years.
How it is different from Employee Provident Fund (EPF)?
EPF is a retirement benefit applicable only for salaried employees. It is a fund to which both the employee and employer contribute 12 per cent of the former’s basic salary amount each month. The amount can be withdrawn by the employee when he or she retires or resigns.
The Logical Indian condemns the cuts in the interest rates of vital schemes involving girl children, senior citizens and salaried employees. We fear that the interest rates have been reduced after the proposal to tax EPF and PPF did not go through. These schemes secure people’s future and makes them independent and hence we demand a roll back on the interest rate cuts on the schemes.