West Bengal's share in small savings rises to highest since pandemic began

Maharashtra has also seen an increase in net collections in recent years

West Bengal has widened its gap over other states in its share of net small savings collections in post offices in 2021-22.

Around Rs 14 out of every Rs 100 saved through such schemes in the country came from West Bengal in 2021-22. Other states like Maharashtra have seen a rising trend. The top five states account for 48.3 per cent of net collections. Others in the top five include Uttar Pradesh, Gujarat and Tamil Nadu.

Small savings schemes in the post office include instruments such as the public provident fund and the Senior Citizens Savings Scheme. The net collections through these ten different options available to savers exceeded Rs 2 trillion in 2021-22.

West Bengal’s share was as high as 20.5 per cent in 2014-15. This declined as other states also contributed increasing amounts. West Bengal’s average share was 12.7 per cent in the last five years. It is now 14.06 per cent (see chart 1). 

Maharashtra’s share has also been rising. It was 2.3 per cent in 2015-16. This rose to 11.1 per cent in 2021-22.

Different schemes offer different rates of interest. For example, the public provident fund has an interest rate of 7.1 per cent from April 2020. The National Savings Certificates have an interest rate of 6.8 per cent from the same period.  It is 7.6 per cent for the Sukanya Samriddhi Accounts. The account is opened in the name of a girl child. The higher interest rate instrument is also among the more popular for 2021-22.

Net collections increased 23.9 per cent to Rs 23,486.11 crore for Sukanya Samriddhi Accounts. The National Savings Recurring Deposit was another popular instrument which offers 5.8 per cent per annum. It showed a 39.1 per cent increase in net collections to Rs 24,768.53 crore.  Net collections are highest for the National Savings Time Deposit (Rs 43,569.05 crore) which offers between 5.5 per cent to 6.7 per cent, depending on the duration of the deposit. Net collections have risen to Rs 2.03 trillion from under Rs 20,000 crore in 2013-14 (see chart 2).   

Interest rates have been rising as central banks globally look to control inflation. This has resulted in an increase in other savings instruments, including banks' fixed deposit rates. They typically rise as the Reserve Bank of India (RBI) raises its interest rates. According to Mumbai-based asset manager Quantum Mutual Fund’s Debt Monthly Observer for July- 2022, the RBI is expected to continue doing so.

“RBI’s monetary policy committee may deliver another 25-50 basis points of rate hike in its August meeting, to take the repo rate above its pre-pandemic level of 5.15%,” it said.

The Lok Sabha question had asked about the government’s plans to raise the interest rates paid on small savings schemes to ‘encourage the public on savings particularly senior citizens….’

“Interest rates on small saving schemes are periodically reviewed by the government based on well-laid principles and accordingly, the interest rates are fixed,” said the answer on 25th July.