The Centre on Thursday, April 1, rolled back its order cutting interest rates on small savings schemes, including National Savings Certificates (NSC) and Public Provident Fund (PPF), for the first quarter of the fiscal year 2021-22.
The Finance Ministry, on March 31, Wednesday, had announced a sharp reduction in interest rates for small savings schemes by 50-110 basis points, reported India Today. The ministry had announced the cut in small savings deposit rate from 4 per cent to 3.5 per cent for the first quarter of the financial year starting April 1, 2021.
The cuts in schemes including from the National Savings Certificates or NSC and Public Provident Fund or PPF would have affected millions of middle-class depositors.
In a tweet on Thursday, Union Finance Minister Nirmala Sitharaman said that the interest rates of small savings schemes of the Government of India shall continue to be at the rates that existed in the last quarter (January-March) of the financial year 2020-21.
"Orders issued by oversight shall be withdrawn," Finance Minister said.
The sudden rollback of the order led to a political flutter as the opposition referred to the withdrawal as a sign of "insensitivity" of the Modi government.
Former union finance minister P Chidambaram tweeted, "Announcement of interest rates on savings instruments for the next quarter is a regular exercise. There is nothing inadvertent about its release on March 31."
Chidambaram said that the BJP government had decided to launch another attack on the middle-class by reducing interest rates to make a profit.
"When caught, the Finance Minister is putting forward the lame excuse of an inadvertent error," the Congress leader said.
"When inflation is at about 6 per cent and expected to rise, the BJP government is offering interest rates below 6 per cent hitting those who save and the middle-class below the belt," he added.
Congress Lok Sabha MP Manish Tewari said, "The NDA government led by PM Narendra Modi considers the interest of millions of small savers so trivial that a notification cutting interest rates are issued as an 'oversight'."
"That is the level of insensitivity of this government. It has complete disregard for millions of common people. Yet another sign that this is a government of the rich and works for the rich," Tewari added.
The centre's order on Wednesday had cut the interest rate on Public Provident Fund (PPF) scheme to 6.4 per cent for the April-June quarter.
This was the first time since 1974 that the interest rate on PPF fell under 7 per cent.
Additionally, the interest rate for National Savings Certificate (NSC) was also reduced to 5.9 per cent while the same for Sukanya Samriddhi Account's scheme was slashed from 7.6 per cent to 6.9 per cent. Interest rates for senior citizen savings schemes were also reduced to 6.5 per cent from 7.4 per cent.
"Most unfortunate senior citizens who are not getting pension are dependent on fixed deposits are in great trouble," a Twitter user wrote.
Another user tweeted, "This is not expected from GOVT. Post office was only hope for common people for saving. Not at all happy with this decision. Pls roll back this decision"