6 Government-Backed Savings Schemes in India That Offer Better Returns Than Fixed Deposits
Since the FD interest rates are slowly starting to stabilize, it may be time to look at other investment choices that will fetch you a better return on your investment without necessarily increasing the risks involved. This is where government-backed savings plans from India become very relevant, since they come with a sovereign guarantee and interest rates that can sometimes even be tax-exempt.
Such savings plans are perfect for people who are not willing to take many risks with their investments as well as people who are looking at a long-term approach with regards to their investments.
Senior Citizens’ Savings Scheme (SCSS)
The Senior Citizen Savings Scheme is among the best government-sponsored schemes offering high returns on investments.
Tailored to fit senior citizens aged 60 years and above, the savings scheme has the ability to pay quarterly interest which makes it ideal for generating income post-retirement. Moreover, it is backed by the government, thereby minimizing risks involved.
Investors qualifying for the scheme may benefit from deductions under Section 80C, depending on the applicable taxation rules.
Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana scheme is specifically designed for the financial future of a girl child.
Parents or legal guardian can open an account on behalf of the girl even before she turns 10 years of age. The scheme usually provides one of the highest interest rates from amongst all the other government schemes, and also allows tax deduction on investment, interest income, and maturity amount under certain guidelines.
This scheme is still one of the most profitable ways to save money for further education or marriage.
Public Provident Fund (PPF)
Public Provident Fund remains one of the safest investments in the country even today.
Being guaranteed by the government itself for a tenure of fifteen years, it ensures both steady gains and favorable tax benefits. Interest income from PPF gets compounded every year to generate a significant corpus for the future.
For all these reasons, PPF is a safe choice for any investment portfolio.
National Savings Certificate (NSC)
Another good investment scheme offered by post offices in India is the National Savings Certificate.
This scheme has a fixed maturity period and provides guaranteed returns on the basis of the Government of India’s guarantee. This scheme is highly desirable for individuals seeking to earn assured gains without any risk associated with fluctuating markets.
Investment made in this scheme also enjoys tax exemptions under Section 80C.
Kisan Vikas Patra (KVP)
Kisan Vikas Patra is for investors looking for guaranteed gains but on a larger time scale.
Though KVP does not give any tax benefit unlike other investment plans, KVP assures gains, and money doubles within the fixed tenure as per the current interest rate prevailing at the time of purchase.
Thus KVP is apt for conservative investors looking for capital appreciation.
Mahila Samman Savings Certificate
The Mahila Samman Savings Scheme has been started to motivate women to save money.
It is a scheme for a limited period of investment that offers a good fixed rate of interest and partial withdrawals. The scheme has turned out to be an excellent choice for women to make short-term savings and earn assured returns.
Its backing by the government adds another level of security for the investors.
Why These Schemes Can Outperform Fixed Deposits
Unike regular bank fixed deposits, there are some government-sponsored savings schemes in India which currently pay relatively high interest rates with sovereignty guaranteed to the investor.
Some of them may have other additional benefits such as tax exemption, regular income generation, and compounding which will increase the total gains from the investments. Since these schemes are sponsored by the Government of India, they are regarded as one of the safest investments.
But it must be noted that the interest rates are revised on quarterly basis.
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Conclusion
Government-sponsored savings plans remain some of the safest investment options for investors in India. These schemes offer competitive interest rates along with sovereign guarantees and even tax benefits in many cases, making them more profitable than traditional bank fixed deposits.
When considering investments, ensure that you have compared the latest interest rates notified by the government in accordance with your financial goals.
In case you want higher returns with minimum market risks, government-sponsored savings plans will be better investments than traditional fixed deposits.
