The government's small savings schemes have seen a decrease in collections as a result of the change to the new tax system, which has been embraced by almost 70 per cent of taxpayers, according to RBI data
There has been a "significant" decline in the collections into popular schemes like the National Savings Certificate, Sukanya Samriddhi Account (SSA), and Post office saving accounts especially among younger investors who are choosing the new tax regime.
Total saving data
The latest RBI data shows that receipts of total savings in government schemes show the recorded figure in dec 2023 stood at Rs 12,386 crore, which declined to Rs 11,340 crore in jan 2024. In feb 2024 the total receipts of savings in government schemes even fell further to Rs Rs 10,025 crore.
Saving Certificates
The saving certificates also saw a major decline from Rs 4,247 crore in jan 2024 to Rs 3,940 in feb 2024. Individually, the national savings certificate followed a similar pattern, total receipts in NSC recorded at Rs 1,581 crore in jan 2024 which declined to Rs 1,446 crore in feb 2024.
Post office savings
The deposits in post office saving accounts also a shaprt decline in total receipts from Rs 3,014 crore in jan 2024 to Rs 1,520 crore in feb 2024.
Pixabay
Public providend fund (PPF) collection
The PPF (public providend fund) was a exception for decline in government backed saving schemes. The PPF saw a gradual increase in total receipts, which were recorded at Rs 489 crore in jan 2024 which increased to a Rs 605 crore in feb 2024.
Senior citizen saving scheme
Positively, the Senior Citizen Savings Scheme saw a rise in subscribers and nearly triple its collection to Rs 1.12 lakh crore in the previous fiscal year. A higher maximum deposit limit and higher interest rates were cited as the reasons for this growth, though no significant increases are anticipated this year.
Reasons behind drop in deposit
Although these schemes provide safe returns and high interest rates, keep in mind that interest rates are subject to quarterly reviews and that individuals who exclusively opt for the previous tax regime can receive tax benefits of up to Rs 1.5 lakh under Section 80C.
One of the major reason of turning away from government schemes is investors wanting mulyibagger profits. Most of the young investors are investing in equity linked mutual fund which is giving more return than government schemes. The liquidity in mutual funds is far greater than governmnet schemes. Mutual funds have less charges when exisiting early than lock-in period. Government schemes on the other hand have more charges on early exist.
