Kerala Kaumudi Online
Saturday, 16 October 2021 8.17 AM IST

As even savings become burden for common man


Even as banks continued to cut interest rates on deposits, the Centre's small savings schemes provided some relief to the common man. Interest rates on various deposits through post offices have also been slashed in the meantime. However, people became more reliant on such savings schemes as they have received higher interest rates than banks. These interest rates were also cut down. The revised interest rate will be applicable for deposits from April 1. The highest interest rate so far was on deposits for senior citizens - 7.4 percent. It has now been reduced to six and a half percent. Similarly, interest rates on other savings schemes have been reduced. The biggest setbacks are for seniors who spend their lives investing in savings plans and earning a safe income. Microfinance schemes are no longer attractive to those who find it difficult to cope with the rising cost of living. The Centre's latest move is also discouraging the savings habits of the common man. Ordinary people who are reluctant to go ahead with the market misfortunes by investing in stocks and items like mutual funds rely on the most secure microfinance schemes. The savings plans, which once yielded up to 12 percent, are now offering only five to six percent interest. The common man does not understand the economic theory that a country can only achieve economic growth if there is a large influx of money into the market. How can they say that their demand for high value for money invested is unjustified? The interest rate on the Sukanya Samridhi Yojana, which started with the promise of a secure future for girls, has changed drastically from 7.6 percent to 6.9 percent, a gradual deception of those who believe in the scheme every three months. Savings schemes are becoming more and more unattractive due to the frequent threats of rate hikes, which is explained by the fact that the savings plan rates have to be reduced in view of the rising inflation rate, as well as the central government's attempt to borrow heavily from the public to give high interest rates to small savings schemes.

Whatever the economics, this is a very disappointing move for ordinary people. All this only serves to discourage those who are desperate to earn some money by saving up for the future of the family. It can also lead to a small group of people being lured into financial institutions that offer high interest rates and end up in fraud. Every human being will feel the need to make more money out of the money he saves. The money raised through microfinance schemes is utilized for the development of the country. States also receive a fixed percentage of this. On the one hand there are huge efforts to attract people to savings schemes while on the other hand there are measures to make schemes unattractive. Even banks do not encourage long-term investments now. This is the state of savings plans. All this means that everyday life will be more stressful.

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