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The amount is more than 300% of the average collection made by the scheme in the month of April, finance ministry officials said
To extract the maximum returns that the government-backed guaranteed income Senior Citizens Savings Scheme (SCSS) offers its 8.2% interest rate as announced in this year’s budget, 60+ citizens have funneled upwards of Rs 10,000 crore in this scheme in the first month of the financial year itself. The amount is more than 300% of the average collection made by the scheme in the month of April, finance ministry officials have revealed.
In order to offer stable interest income in a climate of high inflation, the Union government had announced hiking the interest rate by 20 basis point besides doubling the maximum investment from Rs 15 lakh to Rs 30 lakh.
SCSS offers the maximum interest rate that a guaranteed income instrument is available in the market.
Who can invest?
Any Indian citizen who is above 60 can invest in this scheme which is available from post offices and a host of banks. However, those who have reached the age of 55 years and have taken voluntary retirement can also put in their money here. However, NRIs cannot invest in this scheme. The application form mandatorily requires naming a nominee.
The investment in SCSS is also eligible for tax deduction under 80C of the Income Tax Act. The interest is payable quarterly.
Though the maturity period is five years, one can extend it for three more years effectively stretching the tenure to eight years.
Macro spin-off
The improved collections under this small saving scheme have a macro-economic spin-off as well. The government can utilise this money to meet fiscal deficit targets instead of resorting to borrowing from the market.
The government hopes that the April figures are not a flash in the pan and collections in the scheme would remain at elevated levels in the coming months.
In the budget, the maximum amount that can be invested in Post Office Monthly Income Scheme by an individual was also hiked from Rs 4.5 lakh to Rs 9 lakh. The ceiling for joint accounts was also raised from Rs 9 lakh to Rs 15 lakh. However, the amount mopped up by this scheme in April is so far not available.