Small savings target unlikely to exceed July BE of Rs 4.2 trn: Sources
Finance Ministry sources say small savings collections may fall short of the revised Rs 4.2 trillion estimate in the July Budget.
“We had scaled it (small savings deposits) down from the Interim Budget levels. The latest collections won’t exceed the lower estimate of the July Budget,” said a ministry official.
“The government had indicated that they had room to reduce g-sec borrowing. This can potentially come handy to bridge any likely shortfall in small savings,” said Vivek Kumar, economist at QuantEco Research.
Experts link the shortfall to taxpayers shifting to the new income tax regime, which removed tax benefits on investments.
The government finances its fiscal deficit through a mix of cash balance withdrawals, small savings collections, and bond market borrowing
For the three-month period starting October 1, the government maintained interest rates on small savings schemes, including the Public Provident Fund (PPF) and National Savings Certificate (NSC), for the third consecutive quarter. These schemes, part of the government’s initiative to promote savings among the public, offer safe investment options with tax benefits.
The Mahila Samman Savings Certificate, launched in FY24 to encourage women’s savings, offers a 7.5% interest rate and partial withdrawals. It has raised Rs 30,000 crore but will end in March 2025.
The 2023-24 Economic Survey warned that India’s growing financialisation, including derivatives, may destabilize the economy if it outpaces growth.
