National New: In a surprise move amid rate cuts by the RBI, the Government of India has retained interest rates on key small savings schemes like PPF and Sukanya Samriddhi. This decision is effective from July 1 to September 30, 2025, marking the fourth consecutive quarter of unchanged rates. Despite inflationary pressures and falling bond yields, authorities have resisted the temptation to reduce rates, offering relief to conservative savers.
RBI Cut, But No Impact Here
Also Read
The RBI recently cut the repo rate by a cumulative 1% across February, April, and June. Naturally, markets expected a parallel drop in small savings rates. However, the government’s decision to hold steady has left many surprised. It signals the administration’s focus on maintaining returns for the middle class amid volatile economic trends. Sources say this might also be a politically cautious move ahead of state elections.
Schemes That Stay Strong
The PPF continues to offer 7.1% annually, while Sukanya Samriddhi remains at 8.2%. NSC offers 7.7% and SCSS holds at 8.2%. These are among the highest yields in secured instruments currently available in India. Backed by sovereign guarantees and tax benefits, these schemes remain a pillar for long-term investors, especially in the absence of attractive bank deposit rates.
The Gopinath Formula Dilemma
Interest rates for these schemes are recommended based on the Shyamala Gopinath Committee formula, which links returns to government bond yields. However, the government is not bound to implement the formula strictly. In this case, despite falling G-sec yields, rates are left untouched. The move has triggered debate among economists about the credibility and flexibility of the formula.
Reactions From Small Investors
Investor reactions are mixed. While Sukanya depositors welcomed the continued 8.2% rate, PPF savers expected a small hike. "With inflation eating into returns, even a 0.2% hike would have helped," said a senior citizen in Bhopal. Financial planners advise clients to hold onto these schemes as a buffer against market volatility and falling FD rates.
How Banks Compare Now
Currently, top Indian banks offer 6.5–7% on fixed deposits, with slightly better returns for senior citizens. Compared to this, PPF and SSY remain more appealing, though liquidity and lock-in restrictions apply. Analysts say investors must balance flexibility and safety while allocating funds, especially during economic transition periods.
When Will Rates Really Change?
The last change came in Q4 FY2023-24, when Sukanya’s rate rose from 8% to 8.2%. Since then, no movement has occurred. Experts speculate that rates may remain frozen through 2025 unless inflation rebounds sharply. Until then, these schemes offer stability—but not surprises—for savers betting on secure, government-backed instruments.