A Comment on Small savings rate cut and relating it with inflation

My Comment on an article " Small savings rate cut: Who gains, who loses" published in the economictimes.com Dated 29/03/2016 at 3:30 pm.


"I wonder how do you say the inflation rate has fallen in recent periods, whereas the most essential commodities like rice and pulses are skyrocketing. 

The basic food we eat in India is rice which is at Rs.50 per kg. or even more. The toor dal is at Rs. 240 per kg. Other essential items which are required for good nutrition are also very high priced. 

So, how is it possible that inflation can be low? Isn't it like baffling the public by showing a mirage and telling them "there it is the water pond; go and quench your thirst"".

Small savings rate cut table for the Quarter April- June,2016

The below interest rates table on small savings (applicable for the Quarter April to June, 2016) is copied from the article "How to make best out of small savings rate cuts" published in the economictimes.com Dated 21/03/2016 for the benefit of public.                          

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 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."