Government Retains Interest Rates on Small Savings Schemes

The Indian Government has decided to keep interest rates unchanged for various small savings schemes, including the Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana, for the seventh consecutive quarter starting October 1, 2025. The Ministry of Finance announced that rates for the third quarter of fiscal year 2025-26 (October-December) will mirror those of the second quarter (July-September), signalling continued stability in returns for millions of depositors.

Small savings schemes, operated primarily through post offices and designated banks, remain a cornerstone of secure investment for middle-class households, offering tax benefits and guaranteed returns amid economic uncertainties.

Key schemes retain their existing rates: the Sukanya Samriddhi Yojana, designed to secure girls’ futures, continues at 8.2%, while both PPF and three-year term deposits hold steady at 7.1%. The post office savings account remains at 4%, and the Kisan Vikas Patra, a popular doubling instrument, stays at 7.5% with a maturity of 115 months.

The NSC offers 7.7%, and the Monthly Income Scheme provides 7.4% for investors seeking regular payouts. These rates, unchanged since the last revision in the fourth quarter of 2023-24, reflect the government’s cautious approach amid stable inflation—hovering around 4.5%—and robust economic growth projected at 7% for 2025-26 by the Reserve Bank of India.

The decision aligns with the quarterly review mechanism under the Small Savings Schemes framework, governed by the Finance Ministry to balance depositor benefits with fiscal discipline. Small savings collections, exceeding ₹18 lakh crore annually, fund government expenditure while fostering financial inclusion, particularly in rural areas.

The schemes’ fixed returns shield investors from market volatility, unlike bank fixed deposits, which have seen marginal rate hikes by private lenders like HDFC Bank (7.4% for select tenors). However, analysts note that prolonged rate stagnation could prompt savers to explore higher-yield alternatives if inflation ticks upward.

Also Read: ED Raids Six Locations in FEMA Probe Targeting Anil Ambani’s Reliance Infrastructure

This continuity provides predictability for depositors, especially retirees and low-risk investors, and underscores the government’s confidence in current fiscal health. With India’s fiscal deficit at 38.1% of the annual target through August 2025, per Controller General of Accounts data, maintaining steady rates avoids additional strain on borrowing costs.

As the festive season approaches, the unchanged rates ensure consistent returns for over 30 crore account holders, though calls for upward revisions may grow if global economic pressures mount. The next review is slated for December 2025.

Also Read: Centre’s Fiscal Deficit Hits 38 Percent of Target by August-End