The Centre has pulled back its decision to cut interest rates of small savings schemes announced last evening.
The announcement was made by Finance Minister Nirmala Sitharaman on April 1 on microblogging site Twitter.
Early in the day Sitharaman tweeted: "Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021."
She added that the orders, which were "issued by oversight", will be withdrawn.Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021.
Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India
— Nirmala Sitharaman (@nsitharaman) April 1, 2021
This came after the Ministry of Finance had on March 31 announced a cut in small savings deposit rate from 4 percent to 3.5 percent for the first quarter of the financial year starting April 1, 2021.
The ministry said the rate cuts "are in line with overall interest rate movement in the financial system."
"One-year time deposit rates are cut to 4.4 percent from 5.5 percent, 2-, 3-, 5- and 5-year recurring deposit rates are cut to 5 percent, 5.1 percent, 5.8 percent and 5.3 percent, from 5.5 percent, 5. 5 percent, 6.7 percent and 5.8 percent, respectively," the ministry had said.
It had also cut interest rates of the Senior Citizen Savings Schemes to 6.5 percent from 7.4 percent; of the Public Provident Fund Scheme to 6.4 percent from the earlier rate of 7.1 percent; of the Kisan Vikas Patra scheme to 6.2 percent from 6.9 percent; and of the Sukanya Samriddhi Account Scheme to 6.9 percent from 7.6 percent.
"These interest rate cuts are in-line with overall interest rate movement in financial system. When bank lending deposit rates fall sharply, small savings rates have to follow to align with the larger trend," the ministry had justified.
Reactions to the reversal came swift. Among these included former PMEAC member Rathin Roy, who was caustic about the back-and-forth: "A decision taken yesterday reversed today. It is very sad for me to see how incompetent and incapable the Finance Ministry has become. Like Air India, the Finance Ministry of India has declined from being an icon to a demonstrably dysfunctional outfit."
A decision taken yesterday reversed today. It is very sad for me to see how incompetent and incapable the Finance Ministry has become. Like Air India, @FinMinIndia has declined from being an icon to a demonstrably dysfunctional outfit. https://t.co/Bf6UOkAyjJ
— rathin roy (@EmergingRoy) April 1, 2021