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 economictimes.com 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."

A Comment on rethinking of the lending system by Banks

My Comment on an article "Time for rethink! Here's why PPF, Small savings rates cut a good move for Banks" published in the economictimes.com Dated 20/03/2016 at 10:30 pm.


"Yes, definitely it is time for rethink by banks and financial institutions.

There should be a preferential lending rate according to the type of loans offered by banks. 

Housing loans should be cheaper as shelter is the most important necessity of human being. Educational loans and agricultural loans should also be offered at cheap rates. 

But many other loans like credit cards, personal loans,financial loans to businesses can be made expensive in most cases. Banks can fill their deficits in this way.

Banks should review their lending system and be more friendly towards common man than business people and rich class people."

A comment on PPF and NPS rate cuts

My Comment on an article "Finance Minister Arun Jaitley defends PPF rate cut, attacks Congress" published in economictimes.com Dated 20/03/2016 at 10:10 pm.

"It may be reasonable from economic point of view. 

But, government could have shown some generosity by maintaining the rates of interest intact on PPF and NPS schemes. Actually, it needs to be raised according to the rate of inflation and not to be decreased at any circumstance. 

You are grabbing the meagre income earned by salaried class and other employees who are saving for their future lives and security. Already their income is very low as compared to the increasing inflation rates. 

You can on the other hand offer lower rates on bank deposits and MFs to fill up the deficit in government revenues.That can be tolerated as investments and deposits are extra incomes in most of the cases."

A Clarification regarding taxation of PPF and EPF withdrawals

My Comment on an article "Budget 2016: PPF stays on exemption list, only EPF interest to attract tax" published in the economictimes.com on 01/03/2016 at 10:25 pm.


"Now, they have cleared the doubt. 

It was very ambiguous at the early hours of Budget release today, when they announced that 60% of PPF and EPF withdrawals will be taxed. It implied that principal amount is going to be taxed. 

Now, it is clarified by Revenue Secretary that only interest withdrawal will be taxed. So, it can be acceptable to some extent. 

And, they have further clarified now, that if same interest amount is further invested into annuity schemes, then, they will not be taxed at all. That will be a good option open."

A Comment on increase in lock-in period of PPF and higher interest offer

My Comment on an article "Government may increase lock-in period for PPF; to offer higher interest rate for 20 year tenure" published in the economictimes.com Dated 04/02/2015 at 10:45 pm.


"It is a good way of funding for long term projects of funding. 

On the one hand, you are offering incentives to the depositors to invest more money in Fixed deposits and Public Provident Funds by offering higher rates of interest. And simultaneously creating funds for government as the depositors will hesitate to break their deposits in fear of losing lucrative interest amounts. 

So it will be a better proposal for both the depositor as well as the government."

A Comment on Investment in Tax saving schemes

My Comment on an article "Tax saving schemes see net outflow of Rs. 934 crore in 2012-13" published in the Economic Times Dated 02/01/2014 at 11 am.


A good advice. It means only those who can bear risk of low returns can invest on such schemes. Otherwise, PPF or other Fixed Deposit Schemes of Banks are more suitable for investors to get higher returns and also enjoy tax benefits.