Centre in a 'wait & watch' stance on small savings mop up

The Centre is in a "wait & watch" stance on small savings collections, anticipating a surge in deposits during the fourth quarter (Q4) when most investors contribute, according to an official who spoke to Business Today TV.

“Most of our major collections will come in March, and we’re closely monitoring the figures,” the official added.

Sources indicate a slight decline in small savings investments, largely due to younger taxpayers shifting to the new tax regime. Popular schemes like the Public Provident Fund (PPF), Sukanya Samriddhi Account (SSA), and National Savings Certificate have seen "significant" drops in both collections and subscriber numbers as younger investors increasingly prefer the new regime.

“There’s been a notable decline as more people now choose equities for their investments,” the official said.

 Despite high interest rates and secure returns, interest rates on these schemes are reviewed quarterly. Tax benefits up to Rs 1.5 lakh under Section 80C are only available to those in the old tax regime.

Official data shows net deposits under PPF surged by about 134% from Rs 5,487.43 crore in 2013-14 to Rs 12,846 crore in 2021-22.

Nevertheless, the Senior Citizen Savings Scheme saw nearly triple collections last fiscal year, reaching Rs 1.12 lakh crore, fuelled by higher interest rates and a raised deposit limit. However, no major interest rate hikes are expected this year.

The Mahila Samman Savings Scheme is likely to end by March 2025, with collections reaching Rs 30,000 crore so far.

The Union Budget for FY25, presented in July, set a target of Rs 4.2 trillion for NSSF collections, down from Rs 4.67 trillion in the Interim Budget. Revised estimates for FY25 may be lower, pending collection performance in January, with discussions ongoing according to sources.