Centre hikes PPF, NSC rates by 40 bps to catch up with tightening liquidity

Experts claim this reflects tightening; bank deposit rates may also go up

The government has spiked interest rates on small savings schemes by 40 basis points (bps) for the October-December quarter this year, in a bid to catch up with tightening liquidity.    

The move, made after many years, follows hike in deposit rates by banks, rising bond yields, and two repo rate hikes by the Reserve Bank of India (RBI). 

The government had kept the rates constant for two quarters, after reducing them by 20 bps in the January-March quarter. Schemes such as the Public Provident Fund, National Savings Certificate, and Kisan Vikas Patra will be affected.

"The government's decision