Small savings panel to meet today

The committee on small savings is expected to meet today to take a view on the rationalisation and phasing out of some of the small savings instruments.

The committee, under the chairmanship of the deputy governor of the Reserve Bank of India, is slated to submit its report by the end of this month.

The committee has been appointed by the government to take a re-look at the entire corpus of small savings instruments. The need to take an integrated view of the entire set of instruments has also emerged as Finance Minister Jaswant Singh had promised to introduce a new bond in the market -- Dada Dadi Bonds -- effective from April 1.

On the government's part, the presence of too many instruments at around the same rate of interest raises the prospect of cannibalisation of some of them.

The government has, from this fiscal, commenced a savings scheme called Varishtha Pension Bima Yojana, which offers an interest rate of 9 per cent.

The difference between the market rate of interest and the rate offered by government instruments is being met as a subsidy by the government and the committee will have to consider the sustainability of such a course over the long term.

Since the Dada Dadi Bonds are targeted at senior citizens, there is a need to clear the air about the applicable terms and conditions of the bond vis-a-vis Varishtha Pension Bima Yojana.

However, as of now there are no plans to terminate the hugely popular Public Provident Fund. The committee may, however, look at compressing the various forms of postal time deposits.

The decisions are also likely to be incorporated in the regular Budget for 2004-05, which will be presented by the new government, which is expected to assume office by the end of May.