Small Savings Schemes Loosing out to Bank Deposits as Interest Rates Shoot Up: ASSOCHAM

Scheme wise Analysis of the Small Savings : Monthly Income Scheme- Savings under the Monthly Income Scheme which account for one-third of total small savings, declined by 47 per cent in last financial year even as they recorded CAGR of 25 per cent during the period from FY2000 to FY2006. The collections under the scheme during FY07 was Rs. 25007 crore as compared to Rs.47273 crore in the previous year. The total amount outstanding at the end of fiscal 2007 was Rs. 1,53, 636 crore.

Kisan Vikas Patra- Savings invested with Kisan Vikas Patra recorded a decline of 26 per cent during 2006-07 a compared to 25 per cent increase in previous year and overall compound annual growth of 4.5 per cent in the period of six year extending from FY00 to FY06. Amount of Rs. 153636 crore is outstanding in Kisan Vikas Patra Scheme, which is around 27 per cent of the total small savings.

Scheme             CAGR (FY2000 to FY2006)    Growth rate in FY2007
Monthly Income Scheme         25         -47
National Saving Certificate VIII issue    5.9     -28
Total Deposits         23.3         -19
Public Provident Fund       13.6         -18
Post office Time Deposits – total    25         -11
Post Office Saving Bank Deposits    ;13         1
Post office Recurring Deposits    23         1
Kisan Vikas Patra         105         74


Post Office Recurring Deposits- The receipts of the Post Office Recurring Deposits Scheme grew by mere 1 per cent as compared to the previous year growth rate of 18 per cent and CAGR of 19 per cent during FY2000 to FY2006. The scheme accounts for 10.5 per cent of the total small savings. The amount outstanding at the end of fiscal 2007 was Rs. 59279 crore.

National Saving Certificate VIII Issue- National Saving Certificate VIII, accounting for 10.5 per cent of the total small savings, registered a decline of 28 per cent in last financial year as against the compound annual growth of 6 per cent during six years preceding the fiscal 2007. The amount outstanding with the Scheme was Rs. 59110 crore.

Post Office Time Deposits – Post office time deposits consist of 1 year, 2 year, 3 year and 5-year time year deposits. They account for 6.64 per cent of the small savings. The receipts with total post office time deposits witnessed 11 per cent decline in financial year 2007 as compared to the CAGR of 25 per cent over the period of 2000 to 2006. Two year time deposits and five year time deposits, have bore the maximum brunt with 18 per cent and 6.5 downfall in the collections. They had recorded compound annual growth of 34 per cent and 23 per cent. They account for 5 and 30 per cent of the total amount invested in post office time deposits. One year time deposits, which have a maximum share of 48 per cent in time deposits, registered a growth of 9 per cent in FY007 as compared to 27 per cent growth in previous year and compound annual growth of 51 per cent. The growth rate of 3 year time deposits also came down to 1 per cent as against 25 per cent growth in fiscal 2006 and CAGR of 63 per cent.

Post Office Saving Banks Deposits- The receipts with Post Office Saving Bank Deposits grew by mere 1 per cent in FY2007 as compared to a growth rate of 27 per cent in fiscal 2006. The share of post office saving deposits in total small savings is around 3 per cent. The Scheme was growing at compound annual growth rate of 18 per cent in the six-years period preceding the financial year 2007.

Public Provident Fund- Public Provident Fund accounting for 3 per cent of total small savings registered a decline of 18 per cent in receipts during the year 2007 while the scheme was growing at the compound annual growth rate of 13.6 per cent. The growth rate in the previous financial year was 19 per cent.

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