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On Thursday morning, Finance Minister Nirmala Sitharaman lifted the gloom in numerous middle-class households by tweeting that the previous night’s announcement of a sharp rate cut in small saving instruments was an oversight and the old rates will continue. In fact, she should see to it that the interest rates on small savings are maintained at the current levels for at least through FY22.

The Indian economy is struggling to emerge from the grip of a pandemic that has destroyed numerous small businesses and millions of jobs, apart from deep and wide wage cuts.

Though the Centre is burdened with a huge expenditure and low revenues and needs to reduce its liabilities. It should also bear in mind its duty towards a huge vulnerable section of the citizens who are critically dependent on the interest income from small savings that, by definition, is designed for the financial security of small savers. As it is, the interest rates are close to CPI inflation and it brings down the real income from these instruments to a pittance.

The government would do well to resist the temptation of going for the low hanging fruit and adopt the robust way of boosting growth and earn more revenues. It will not only allow the current flow of interest income to the needy but would also generate employment and restore wages of those worst hit by the economic slide.

Almost all agencies, both Indian and global, have predicted growth rates between 10-12% for the economy. It is true that the fiscal deficit of the Centre is at an unsustainable 6.8% of the GDP in FY22. But it is a marked improvement on the 9.5% in FY21. If a rate cut is held back in a year of recovery for the sake of a large section of the population, fiscal prudence can wait a bit.