Small savings were established way back in 1959 with the aim of providing avenues for saving to everyone through post offices. Deposits are around 68% of total small savings, while 24% are in certificates and the balance 8% in PPF accounts. With the anchor rate for small savings at 6.8%, the government will have to pay around 7.3%, which is too high. This argument is weak; given the class of people who invest in small savings, substitution does not take place. Be that as it may, the rationale offered is in conflict with the ethos of small savings.

Source: Mint May 18, 2021 15:47 UTC