Nation has to move to lower interest rates: FM on PPF rate cut


New Delhi, Mar 20 (PTI): Under flak over slashing interest rates on small saving schemes, Finance Minister Arun Jaitley today defended the move, saying the country has to move towards lower interest rates to make the economy more efficient rather than sluggish.

He also hoped for the passage of bankruptcy and GST bills in the second half of the Budget Session, saying differences on the GST bill seem to be "narrowing down" and he, along with Parliamentary Affairs Minister Venkaiah Naidu, will make "more efforts" to bring the Congress on board.

Speaking to reporters at the BJP national executive meet here, he said interest rates on small saving schemes were "formula based" and the government uses its resources to give subsidy on these schemes, above the rates determined by the market.

Rejecting the criticism of Congress Vice President Rahul Gandhi for reducing interest rates on PPF and senior citizen saving schemes among others, Jaitley said the UPA government also went by the same formula but the rates were high during its time due to a sluggish economy.

"The formula has been there for long, we did not make it. The market determines the interest rate and government gives subsidy on its securities, including saving schemes, above it. We give it in PPF, we give a little more on senior citizen schemes. It's formula driven, it's linked to the market.

"Interest rates had risen a lot earlier but now they have come down. The way economy is moving today, we cannot have a situation where lending rates are going down but deposit rates remain high. Both are linked. To make economy more efficient rather than sluggish, the country has to move towards lower interest rates in both," the Finance Minister said.

The PPF interest rate at 8.1 per cent remains "reasonably lucrative", he said, adding nowhere in the world, interest rate is so high. As it is tax free, the actual earning is close to 11.12 per cent, Jaitley said.

He also defended the proposal of one per cent excise duty on gold jewellery, he said luxury items must come under taxation system as the country is moving towards GST system.

Jewellers were concerned about harassment from tax officials and "I fully agree that it should not happen," he said. Jewellers had yesterday called off their 18-day old strike to demand rollback of proposed excise duty on non- silver jewellery.

  

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Comment on this article

  • alfria, mumbai

    Mon, Mar 21 2016

    Just because of the 31% who voted for bjp on false promise of Acche Din, 69% of the population have to suffer under this useless FM.

    DisAgree [1] Agree [12] Reply Report Abuse

  • jayakayanth, bangalore

    Mon, Mar 21 2016

    Jaitlygi is right o where in world ppf interest rate is high including tax benefit.
    Govt should take strong measures and cut the interest rate and bring to level of other countries.india can only progress and economically advance when there low interest rate. And cut in subsidies.

    DisAgree [10] Agree [1] Reply Report Abuse

  • Rohan, Bangalore

    Mon, Mar 21 2016

    Mr. Jayakanth, i agree with your point if we had social safety. What is the interest rate you are paying for the loans you take? What is the minimum tax slab in India or do you belong to the section who do not pay tax?You cannot compare Indian economic standard to any other developed countries. What Mr. FM has done is back stabbing on the tax paying class. PPF is used by majority salaried class as their long term savings and also a tool to save some tax and reducing interest rate on PPF is an immature decision by the finance ministry. The statement given by FM is that by lowering interest economy will be more efficient that being sluggish. I am paying an interest rate of 9.75 when i have to buy a housing loan which is higher than the PPF interest. Where is this money going? Have you ever observed the interest rates in India? apart from housing loan rest all loans interest is above 10 which means common man is looted in all terms.

    DisAgree Agree [9] Reply Report Abuse

  • shan, dubai

    Mon, Mar 21 2016

    We have rejected politician(lost in election) is our finance Minister and who got fake certificate HRD minister. What type betterment you expect????

    DisAgree [2] Agree [13] Reply Report Abuse

  • AKIL VIJAY DSOUZA, UDUPI/BANGALORE

    Mon, Mar 21 2016

    "ಮಂಗನ ಕೈಯಲ್ಲಿ ಮಾಣಿಕ್ಯ"

    DisAgree [2] Agree [13] Reply Report Abuse

  • MICHAEL NORONHA, Mysore

    Mon, Mar 21 2016

    FM why are you not slashing the interest rates on housing loans and other consumer loans? Why focus only on slashing interest rates on our savings? This is dishonesty and betrayal of the voters aspirations on your part. You have never been true to your words which you spoke when in the opposition.

    DisAgree Agree [15] Reply Report Abuse

  • Stan, Udupi/ Dubai

    Mon, Mar 21 2016

    Nation needs austerity measures from top i.e less salary for Ministers, parliamentarian, babus and less foreign trips by PM. Punishing the poor and enjoying with power is the attitude of these politicians and should be confronted by aam aadmi.

    DisAgree Agree [18] Reply Report Abuse

  • R.Bhandarkar, Mangaluru

    Mon, Mar 21 2016

    The FM in any case appears like one who has no 'interest' in the affairs of the common man...

    DisAgree Agree [20] Reply Report Abuse

  • RAVINDRA, KARKALA

    Mon, Mar 21 2016

    more pain for small savings investors as the government is going to align interest rates on small savings products on a quarterly basis now. Govt making space to RBI to lower interest rate which is essential for India to march forward. Govt should go toward market oriented economy and cannot subsidies each and everybody.

    DisAgree [1] Agree [5] Reply Report Abuse

  • India First, India

    Mon, Mar 21 2016

    Loan interest rates are still 10.5 to 14 Percent in all banks. In other private financial institutions it is more than 15 to 20 percent. What nonsense he is talking ?

    DisAgree [1] Agree [13] Reply Report Abuse

  • RONALD, UDUPI

    Mon, Mar 21 2016

    The dumb,brainless and chatterbox lawyer knows that Salaried persons are the only earning citizens of this country !!!!!!!

    DisAgree [3] Agree [23] Reply Report Abuse

  • GM, MLUR

    Mon, Mar 21 2016

    Deposit in swiss account.

    DisAgree [1] Agree [14] Reply Report Abuse

  • John, Udupi

    Mon, Mar 21 2016

    I am very happy to see BJP delivering slap over slap for the common man who elected them for the promises they made!. Anybody arguing for lower interest rates, I would just say that these things are done only in case of economic stagnation and in developed countries. India's large chunk of population is poor and middle class and they depend mainly on interest income to survive. What BJP is doing right now is to prove what they have been accused since long!, that they are only serving the rich and mighty and never common people!. Unfortunately these rich and mighty never ever vote in elections!.

    DisAgree Agree [33] Reply Report Abuse

  • SMR, Karkala

    Mon, Mar 21 2016

    The government is still no clue as to who are the non-payers who owe our public banks nearly Rs 4 lakh crore.

    Black money is already proved big 'jumbla'.

    Ab ki bar Modi sarkar is already targeted salaried and self-employed class by slashing the PPF, NSS and saving scheme rates.Fearing the voters mood they partially rolled back the controversial proposal to tax pension withdrawals.

    The strike by jewellers and bullion traders continued for the 18th straight day on Saturday demanding rollback of the proposed excise duty on non-silver jewellery.

    Now poor man's safe deposit is also at risk.

    We know of Mallya. Why can't we know of the others expose all defaulters?

    Why salaried and self-employed class suffer on the expense of 'capitalist'?

    It is time save the farmer from suicide and push the defaulters to gallows.

    Jai Hind

    DisAgree Agree [22] Reply Report Abuse

  • JOY CASTELINO, MOODUBELLE/DUBAI

    Sun, Mar 20 2016

    Acche din anewala hai!!!!!!

    DisAgree Agree [15] Reply Report Abuse

  • Tomcat , Mangalore

    Sun, Mar 20 2016

    Iam enjoying when feku and Bjp inflicts pain on the common man who voted for Bjp. Surely it is ache din for me.

    DisAgree [2] Agree [16] Reply Report Abuse

  • JayapRakash Shetty, Mangalore/UK

    Sun, Mar 20 2016

    People commenting without understanding about economy. Interest rates in UK is 0.5%. If I keep money in bank I get 0.1% interest (they give lower than base rate). This is how economy is stimulated. The lending rate is low. Home loan is available for 2.5%. Businesses can borrow at low rates and create jobs. These are the bold steps people are wishing to stimulate growth. This will help more business growth, lower home loan interest rates etc

    DisAgree [32] Agree [2] Reply Report Abuse

  • geoffrey, hat hill

    Mon, Mar 21 2016

    And the big difference between the west and India that you fail to understand is the lack of social security in India. Unless social security is provided especially to senior citizens in our country, slashing interest rates on their hard earned savings combined with sky rocketing prices will only add to their misery.

    DisAgree Agree [32] Reply Report Abuse

  • stan, dubai

    Mon, Mar 21 2016

    I agree with you...... but in UK people need not think about their old age.... Government will start paying them. What about in India...You pay taxes to run the Government and they will pay low interest rate on the saving and at-least they made Gowshala for cows and what about our retired people how and where they will survive???

    DisAgree Agree [26] Reply Report Abuse

  • Alfred, Mumbai

    Mon, Mar 21 2016

    Jayprakash, when you talk in terms of Britain please do some research and find out, Are we having a good government. Where government doesn't ban anything eat whatever you want, there is no moral policing, Britain people does not require high interest because the senior citizens and old are being taken care by government, first you see what we Indians lack before making comparison.

    DisAgree Agree [30] Reply Report Abuse

  • R.S. Monis, Mangalore

    Mon, Mar 21 2016

    Jayaprakash, if interest rate in UK .5 per cent, why you left India and working in U.K ? With your good knowledge about economy are you trying to improve UK's economy. Also are you working there for with the salary what you would get if you were in India ?

    DisAgree Agree [11] Reply Report Abuse

  • Harish, MANGALORE

    Mon, Mar 21 2016

    Shetty,

    Do you comparing India vs UK in interest rates.
    First you understand economy of UK Vs India then Pound Vs Rupees in every aspect including living standard.
    Indian people always depend on savings in their old age.
    Do Indian govt pay us in our old age..
    At least understand before comparing to UK & supporting

    DisAgree Agree [14] Reply Report Abuse

  • Ravi C, Mangalore

    Sun, Mar 20 2016

    Didn't you know this while spending crores and crores on party marketing, advertisement and foreign trips? Shame on you sir. Why you had to give acche din assurance to come to power.

    DisAgree [3] Agree [50] Reply Report Abuse

  • Kenneth, Shirva

    Sun, Mar 20 2016

    Interest rate Should come down. there is no doubt. But Lot of Indian Middle class people are depending on Interest income. Unless giving option to get reasonable income on their small saving, going for rate cut will not be help full for common people. Investment in Equities for middle class is still beyond their thinking level.

    DisAgree [3] Agree [36] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sun, Mar 20 2016

    Government has to perform to achieve higher interest rates ...

    DisAgree [5] Agree [42] Reply Report Abuse

  • alan, mangalore

    Sun, Mar 20 2016

    the money saved on the lower interest rate pays for Fekus foreign jaunts. Remember Fekus loan mela to nepal , bangladesh etc. It will come to haunt our nation ,the comman man will have to pay for the blunders committed by Feku. We are indeed doomed .

    DisAgree [5] Agree [41] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sun, Mar 20 2016

    alan, why is he donating our 15 Lacs to Nepal, Bangladesh, Mongolia & Somalia to become Global Leader ...

    DisAgree [4] Agree [42] Reply Report Abuse

  • JJ,

    Sun, Mar 20 2016

    All lessons for poor... Ache din!

    DisAgree [4] Agree [34] Reply Report Abuse

  • MASTHAN , DUB

    Sun, Mar 20 2016

    NEXT SCHEME WILL BE

    ALL INDIANS SHOULD PAY 15 LAKH EXTRA. OR ELSE NO RATION CARD AND PASSPORT AND NO VOTING RIGHTS.

    DisAgree [8] Agree [56] Reply Report Abuse

  • krishna, canada

    Mon, Mar 21 2016

    We want a "no-interest" bank.. but...

    DisAgree [9] Agree Reply Report Abuse

  • vidisha, Mumbai

    Mon, Mar 21 2016

    You should be the first customer for the "no interest" bank and you should deposit all your saving.

    DisAgree Agree [8] Reply Report Abuse


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