‘Sitharaman’s U-turn on rate cuts an ‘Oversight or Election-Driven Hindsight?’ asks Priyanka Gandhi

The Opposition party leader Priyanka Gandhi questioned the Finance Minister Nirmala Sitharaman if the Centre’s overnight sudden change mind on the small savings scheme interest rates cut was simply an “oversight” as stated or one taken due to election-driven “hindsight”.

Priyanka’s comment on Sitharaman’s overnight calling off of the interest rates decision hinted towards the ongoing elections in West Bengal, Tamil Nadu, Assam, etc, and was taken as it would have adversely impact the Assembly polls. Mainly the sudden change of mind was the government’s damage control strategy.

On 31 March 2021, the government announced a slash in interest rates on small saving schemes such as Personal Provident Fund (PPF), national saving scheme (NPS), and many more such schemes for the financial year 2021 with effect from 1 April. However, immediately this morning it took a u-turn by canceling the order and calling it an “oversight”.

Nirmala Sitharaman Tweeted; “Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn. @FinMinIndia @PIB_India.”

As per the official announcement on Wednesday, the PPF interest rates were slashed from 7.1 % to 6.4 %. The NSC was reduced from 6.8 % to 5.9 %. The Kisan Vikas Patra was reduced from 6.9 % to 6.2%. The five-year recurring deposit was slashed from 5.8 % to 5.3 %. However, it was the first time that the interest rates on the savings deposits were reduced from 4 % to 3.5 % annually.

However, the cuts in the interest rates of small saving schemes would have put a major blow on millions of investors.

Yesterday, senior Congress Party leader and former finance minister P Chidambaram sharply criticized the Center for its decision to reduce interest rates on small saving schemes, calling it a wrong step based on “stupid advice”.

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Congress representative Randeep Singh Surjewala also tweeted saying he wondered whether the Finance Minister Nirmala Sitaraman was “running a ‘circus’ or an ‘administration’.” “One can envision the working of the economy when such appropriately passed orders influencing crores of individuals can be given by an oversight.