The government on Thursday kept the interest rates on small savings schemes, including NSC and PPF, unchanged for the third quarter of 2021-22 amid the COVID-19 pandemic and elevated level of inflation. Public Provident Fund (PPF) and National Savings Certificate (NSC) will continue to carry an annual interest rate of 7.1 percent and 6.8 percent, respectively.

“The rates of interest on various small savings schemes for the third quarter of the financial year 2021-22 starting from October 1, 2021, and ending on December 31, 2021, shall remain unchanged from the current rates applicable for the second quarter (June 1, 2021, to September 30, 2021) for FY 2021-22,” the finance ministry said in a notification. According to analysts, the upcoming Uttar Pradesh assembly elections may also have been a factor behind the government’s decision to keep rates unchanged.

According to analysts, the upcoming Uttar Pradesh assembly elections may also have been a factor behind the government’s decision to keep rates unchanged.

Uttar Pradesh is the second highest contributor to the small savings schemes after West Bengal.

For the current quarter, investors will continue to earn an interest of 7.1% in Public Provident Fund (PPF), 7.4% in Senior Citizen Saving Scheme (SCSS), 6.8% in National Saving Certificate (NSC), and 7.6% in Sukanya Samriddhi Yojana (SSY).

The Kisan Vikas Patra (KVP) will continue to have a tenor of 124 months, as earlier. This amounts to an interest rate of 6.9%. Interest rates on post office term deposits have been retained at 5.5-6.7% for tenors of one-five years. Post office savings accounts will continue to earn interest of 4%. The post office monthly income scheme (POMIS) will continue to earn the same interest rate as earlier, which is 6.6%.

On 31 March, the government had reduced the interest rates for the June quarter by 50-110 basis points, but the notification was canceled a day later by Union finance minister Nirmala Sitharaman who cited oversight in the order being issued.

The rates were last revised for the June 2020 quarter. The government had reduced the interest rates on PPF by 80 basis points (bps) from 7.9%, on SCSS by 120 bps from 8.65%, and on NSC by 110 bps from 7.9%.

“There was speculation that the interest rates of small savings schemes may be reduced based on the earlier rollback. However, the government has kept the rates unchanged,” said Harshad Chetanwala, an investment adviser registered with the Securities and Exchange Board of India and co-founder of MyWealthGrowth.