Orissa missed the target for mobilisation of the small savings in 2008-09.The total mobilisation was Rs 193.64 crore (32.17 percent) against the target of Rs 600 crore fixed for the fiscal. This is the fourth year in a row that the targets in small savings could not be achieved.
This is happening as the people who used to invest in small savings instruments are getting attracted by the higher rate of return in alternative forms of investment like stocks and fixed deposits with the banks.
The declining trend in the collections under small savings scheme started from 2005-06 with the collection being Rs 1295.65 crore against the target of Rs 1487 crore. Similarly, the collection was Rs 705.36 crore against the target of Rs 1484 crore in 2006-07.
This trend continued in the next fiscal with the collections being Rs 95.96 crore in 2007-08 compared to the target of Rs 1025 crore. Though the collections have improved to Rs 193.64 crore in 2008-09, it still hovers far below the target of Rs 600 crore for the year.
“Recent volatility in the stock market, assured source of return on small savings instruments and low rate of interest on the bank deposits have revived peoples’ interest in the small savings instruments. It is pre-mature to predict that the situation will improve to 2004-05 level,” an official of the state finance department said.
Sources said, the annual loan availed from the government of India (GoI) has declined from Rs 1337.52 crore in 2004-05 to Rs 160.95 crore in 2007-08. It marginally increased to Rs 160.95 crore in 2008-09.
It may be noted, the borrowings from the National Small Savings Fund (NSSF), which appeared prohibitive for the Orissa government due to its high cost couple of months back, may turn out to be an attractive source of borrowing in the backdrop of the current financial meltdown.
The interest rate on the market borrowing, an alternative source of borrowing for the state government, is nearing 9 percent, which is closer to 9.5 percent interest charged on NSSF loans.
