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UPSC SMALL SAVINGS SCHEMES - English

SMALL SAVINGS SCHEMES

Why in News?

Recently, the government has kept interest rates unchanged on Small savings Schemes due to inflation.

About

• They are the major source of household savings in India and comprise 12 instruments.
• The depositors get an assured interest on their money.
• Collections from all small savings instruments are credited to the National Small Savings Fund (NSSF).
• Small savings have emerged as a key source of financing the government deficit, especially after the Covid-19 pandemic led to a ballooning of the government deficit, necessitating higher need for borrowings.
• Small savings instruments can be classified under three heads:
  • Postal Deposits
  • Savings Certificates
  • Social Security Scheme
• Interest rates on small savings schemes are reset on a quarterly basis, in line with the movement in benchmark government bonds of similar maturity. The rates are reviewed periodically by the Ministry of Finance.
• The Shyamala Gopinath panel (2010) constituted on the Small Saving Scheme had suggested a market-linked interest rate system for small savings schemes.

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