Copyright infringement not intended

Picture Courtesy: https://www.livemint.com/market/stock-market-news/india-may-cut-market-borrowing-if-small-savings-shoot-up-report-11694699450571.html

Context:

The Delhi government seeks to borrow Rs 10,000 crore from the National Small Savings Fund (NSSF) for the fiscal year 2024-25.

What is the National Small Savings Fund (NSSF)?

The NSSF is a fund that collects money from various government-backed small savings schemes. 

It was established in 1999 as part of the Public Accounts of India.

It is managed by the Ministry of Finance under the National Small Savings Fund (Custody and Investment) Rules, 2001, which are based on Article 283(1) of the Constitution.

Loans from the NSSF are more expensive than market borrowings.

Key features of small savings schemes

These schemes provide higher returns than bank fixed deposits.

They come with sovereign guarantees and offer tax breaks.

Interest rates on small savings schemes are revised quarterly.

Small savings schemes can be grouped into three main categories:

Post Office Deposits include Post Office Savings Accounts, Time Deposits (1, 2, 3, and 5 years), Recurring Deposits, and Monthly Accounts.

Savings certificates include the National Savings Certificate (NSC) and the Kisan Vikas Patra (KVP).

Social security schemes include the Public Provident Fund (PPF), Senior Citizens Savings Scheme, and Sukanya Samriddhi Account.

About Delhi Government’s Request for Rs 10,000 Cr Loan from NSSF

The Delhi government seeks to borrow Rs 10,000 crore from the NSSF for the fiscal year 2024-25 to meet its financial needs.

The state Finance Department has objected to the loan request, due to concerns about the high interest rate associated with borrowing from the NSSF. The Model Code of Conduct (MCC) is expected to reduce government spending for 2 to 2.5 months, and the loan will impose a significant future liability on next governments.

Financial health of the Delhi  

The Delhi government stated that the total debt-to-GDP ratio has fallen from 6.4% in 2013-14 to 3.9% in 2023, the lowest in Delhi's history and one of the lowest in India. 

Must Read Articles: 

SMALL SAVING

SMALL SAVING INSTRUMENTS

Source: 

Indian Express