Collections under the small savings scheme for senior citizens have surged after the government doubled the limit in the budget, crossing Rs 1 lakh crore in the first half of the fiscal year.
The Senior Citizen Savings Scheme mopup until September 23 this fiscal was two-and-a-half times higher than the Rs 40,000 crore collection during the same period in FY23, a senior finance ministry official said.
A new small savings scheme for women introduced in the budget is also off to a good start, having garnered Rs 13,500 crore until September 23, the official told ET.
The deposits are expected to keep rising in the coming months.
The Centre has budgeted Rs 4.71 lakh crore from the National Small Savings Fund (NSSF) in FY24, against FY23 revised estimate of Rs 4.39 lakh crore, to finance its fiscal deficit, which is pegged at Rs 17.87 lakh crore.
The FY24 budget raised the deposit limit under the Senior Citizen Savings Scheme to Rs 30 lakh from Rs 15 lakh. The scheme has been fetching an attractive interest of 8.2 per cent since the June quarter, against 8% in the March quarter of FY23. The interests are payable every quarter.The scheme has a tenure of five years, with a facility for a three-year extension upon maturity. Premature closure is allowed, subject to a penalty.The Mahila Samman Savings Certificate, however, is a one-time small savings scheme that will be made available up to March 2025. The scheme has a maximum deposit limit of Rs 2 lakh at a fixed interest rate of 7.5 per cent, with a partial withdrawal option.
Fiscal implications
The robust inflows into these schemes will lift the NSSF and ease pressure on the government to borrow from the market to finance its fiscal deficit.
The government’s market borrowing costs are going up, with yields rising amid a general firming of rates as the Reserve Bank of India‘s (RBI) 250-basis point hike in policy rates transmits through the system.
The benchmark 10-year G-sec yield scaled a seven-month peak of 7.4 per cent on October 9 amid speculations about RBI’s open market bond sale. The yield has since eased to 7.33 per cent on Tuesday.