India rolls back decision to cut interest rates on small savings

India has reversed the decision to lower interest rates by up to 1.1% on its state-backed small savings programme, Finance Minister Nirmala Sitharaman said recently, adding that orders to cut rates to a near five-decade low were issued because of an oversight.

Small savings are the lifeblood of India’s low and middle-income groups, and cutting interest rates would have dealt a severe blow to hundreds of millions of Indians at a time when many have lost jobs and faced pay cuts amid the pandemic. Ms Sitharaman tweeted, “India shall continue to be at the rates which existed in the last quarter of 2020-2021, i.e., rates that prevailed as of March 2021.”

“Orders issued by oversight shall be withdrawn,” she added.

A day earlier, on the last day of the 2020/21 financial year, India had cut interest rates on small savings by up to 1.1% for the June quarter. The government reviews interest rates on government-backed schemes every quarter.