Monday, 21 March 2016

A Comment on arguments placed by supporters of small savings rate cuts

MY Comment on an article "How to make best out of small savings rate cuts" published in the Dated 21/03/2016 at 12 noon. 

"The author seems recommending investors to rush to Banks and Post offices before 31st March of this month to invest in Senior citizenship schemes, NSCs, KVPs and other term deposits to receive the existing higher rates. This is what he thinks making the best out of small savings rate cuts!

His argument regarding PPF rate that "it will be good when compared to inflation rate" is not a rational argument. 

He means that the investor in PPF is still better as he earns a nominal margin of 7.25 PPF interest - 5.18 inflation rate = 2.07% extra. It is not sufficient for meeting the expenses of the retired people which cannot be predicted as you don't know what need arises when.

Further many expenses are not related to the inflation rate or CPI rate. Hospitalisation expenses, higher education expenses for his children, etc. are governed by other factors which are spiralling already."

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