Small Savings Schemes Interest Rates: Are they unrealistically high?

The overnight reversal of up to 1.1 per cent cut in the interest rates of Small Saving Schemes – popularly known as Post Office Schemes – for the first quarter of the Financial Year 2021-22 raises doubt if the current rates are unrealistically high. If the interest rates on Small Saving Schemes are compared to the current Repo rate of 4 per cent, the rates do look high – 7.6 per cent on Sukanya Samriddhi Yojana (SSY) Account Scheme, 7.4 per cent on Senior Citizen Savings Scheme (SCSS), 7.1 per cent on Public Provident Fund (PPF), 6.9 per cent on Kisan Vikas Patra (KVP), 6.8 per cent on National Savings Certificate (NSC), 6.7 per cent on 5-year Time Deposit, 6.6 per cent on Monthly Income Scheme (MIS), 5.8 per cent on 5-year Recurring Deposit, 5.5 per cent on 1-year, 2-year and 3-year Time Deposits and 4 per cent on Post Office Savings Account.

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