| Chidambaram: Looking ahead
New Delhi, March 10: The government today ruled out a hike in the interest payout on National Savings Certificates and other small savings schemes in post offices.
“With the inflation rate ranging between 4 and 4.5 per cent or 4.5 and 5 per cent, the effective rate of interest of 8.2 per cent on a post office monthly income account is very attractive,” finance minister P. Chidambaram said in the Lok Sabha.
Regarding the abolition of the 10 per cent bonus on the maturity value of a post office monthly income account, Chidambaram said it was a mere rationalisation of rates.
“Rationalisation of interest rates on small savings was necessary as these are mandatory for borrowings by the state governments, which can borrow from the market at much lower rates,” he added.
“A broad approach is being followed to keep the inflation rate low and give savers a rate which is higher than that of the inflation. The rate of return on a post office monthly income account is just next to the effective 9.1 per cent rate of interest given to senior citizens,” he said.
The penalty rates for premature withdrawal of deposits under the scheme have also been modified with effect from February 10.
Meanwhile, the government plans to make the country a global manufacturing hub for small cars, textiles, petro products and processed food.
“We will become a global manufacturing hub for small cars in the next three to five years,” Chidambaram said.
“If every second toy and third shoe in the world are made in China, why can’t we emulate these examples'” Chidambaram asked. He said people should throw away “ideological and political blinkers” while working to achieve these goals.
The minister said the best antidote to the country’s grinding poverty was a faster economic growth. He said the government has been able to allocate more resources for its flagship programmes and infrastructure due to over Rs 50,000 crore additional revenue mobilisation annually without coercive tax measures.
Chidambaram identified power as the single biggest bottleneck to faster industrial growth and added that contracts will be awarded by this year-end for five 4000-mw ultra mega power projects each worth about Rs 90,000 crore to make up for the “lost ground” in the last few years.
The minister also promised that there would be no cut in food and fertiliser subsidies and that the public distribution system would continue.
Parliament has decided to pass the Union budget before March 31, dispensing with the need to have a vote-on-account for government expenditure for the first few months after April.