Rejecting the criticism by Congress vice-president Rahul Gandhi and demands to reduce the interest rates on PPF and senior citizens’ savings schemes, among others, finance minister Arun Jaitley said t
Rejecting the criticism by Congress vice-president Rahul Gandhi and demands to reduce the interest rates on PPF and senior citizens’ savings schemes, among others, finance minister Arun Jaitley said the UPA government too had used the same formula but the rates were higher during its tenure due to a sluggish economy. “The formula has been there for long, we did not make it. The market determines the interest rate and government gives subsidy on its securities, including savings schemes, above it. We give it in PPF, we give a little more on senior citizens’ schemes. It is formula driven, it’s linked to the market... Interest rates had risen a lot earlier but now they have come down. The way the economy is moving today, we cannot have a situation where lending rates are going down but deposit rates remain high. Both are linked. To make the economy more efficient rather than sluggish, the country has to move towards lower interest rates in both,” the finance minister said.
The PPF interest rate at 8.1 per cent remains “reasonably lucrative”, he said, adding that nowhere in the world were interest rates so high. As it is tax-free, the actual earning is close to 11-12 per cent, Mr Jaitley added. He also defended the proposal of one per cent excise duty on gold jewellery, saying that luxury items must come into the taxation system as the country was moving towards the GST system. Jewellers, he said, are concerned about harassment from tax officials and “I fully agree that it should not happen”. Jewellers had on Saturday called off their 18-day-old strike to demand a rollback of the move to levy excise duty on non-silver jewellery.
