Small Savings Schemes: Despite the elimination of tax exemptions on investments under the new tax system, investors in India continue to place their trust in small savings schemes. Recent figures clearly demonstrate that people are still prioritising safe and stable return schemes. According to government sources, approximately ₹2.17 lakh crore has been deposited in the National Small Savings Fund (NSSF) as of January 10th. This amount represents almost two-thirds of the budget target set for the current financial year.
Why Small Savings Schemes Provide Relief
The central government benefits significantly from higher-than-expected investments in schemes such as PPF and Sukanya Samriddhi. When the government receives sufficient funds from these schemes, it has to borrow less from the market. This reduces the burden of government borrowing and makes it easier to maintain fiscal balance. This is why small savings schemes remain a crucial part of the government’s funding strategy.
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Government’s Big Target for 2025-26
The government has set a target of raising ₹3.43 lakh crore through the NSSF in the financial year 2025-26. While this is lower than the ₹4.12 lakh crore raised last year, the objective is clear. The government aims to reduce the fiscal deficit gradually. The target is to reduce the deficit to 4.4% of GDP, or approximately ₹15.69 lakh crore, in 2025-26, compared to 4.8% last year.
The New Tax System is Remarkable
In the last budget, several slabs were given relief to make the new tax system more attractive. Following this, a large number of taxpayers adopted the new system. According to officials, about 75% of taxpayers have now switched to the new tax system. Despite this, investments in small savings schemes continue to grow, even though there are no tax exemptions on these schemes under the new system.
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Interest Rates Have Maintained Investor Confidence
The biggest reason for the popularity of small savings schemes is the better interest rates they offer. Interest rates on PPF, Sukanya Samriddhi Yojana, and other government schemes remain more attractive compared to bank fixed deposits. Following the Reserve Bank of India’s (RBI) cumulative 1.25% reduction in the repo rate over the past year, returns on bank deposits have become even lower. As a result, investors appear to be increasingly gravitating towards safer investment options.