To promote consumption after cuts in rates by the Reserve Bank of India (RBI), the Finance Ministry may consider reducing the rates of small savings schemes in the next financial year. Government sources gave this information. On Friday, after the first monetary policy review of the year, the central bank reduced the repo rate to 25 basis points to 6.5 percent to 6.25 percent. This decision was taken in the first monetary policy committee (MPC) meeting chaired by the new Governor of Reserve Bank of India (RBI) Sanjay Malhotra.
Public Provident Fund, Sukanya Samriddhi Yojana, Monthly Income Account Scheme, Kisan Vikas Patra, National Savings Certificate, Senior Citizen Savings Scheme, five -year recurring deposit etc. are included in small savings schemes. There has been no change in the interest rate on these schemes for the last one year.
According to sources, the interest rates of small savings schemes are likely to be reviewed in the April-June quarter of the next financial year.
The cut in rates of small savings schemes is expected to encourage account holders to spend their money, which will increase demand and consumption in the economy and promote investment in private sector. Experts say that this is in accordance with the promotion of consumption given through tax rate cuts by Finance Minister Nirmala Sitharaman in the FY26 budget.
As part of a major change in the new tax system in the Union Budget, the Finance Minister announced zero-tax slab for taxpayers with income up to Rs 12 lakh annually under the new tax system.
Considering exemption in cash management guidelines
Government sources also stated that the Finance Ministry may consider exempting the cash management guidelines for ministries in March.
According to the Central Government’s cash management guidelines, in the fourth quarter and last month of any financial year, ministries should not spend more than 33 percent and 15 percent of their budget targets respectively.
A government source said, “We are encouraging ministries to spend most of the spending by February. If in some special cases they have not been able to do so, we can allow more than the 15 percent limit on the case-by-BY-Case basis. ”
Due to the general election and budget being introduced in July, many ministries and departments were lagging behind in using their entire expenses for the current financial year.
In September 2024, the Department of Economic Affairs gave a discount in the rules related to releasing a large amount of Rs 500 crore or more for all expenditure items, allowing the necessary operational flexibility to implement the budget.