The Hindu : Business : Bonus on Post Office MIA scheme restored

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Saturday, Dec 08, 2007
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Bonus on Post Office MIA scheme restored

NEW DELHI: In a major exercise to increase household savings, the Union Government on Friday restored bonus on the once-popular monthly income scheme of post office and extended the tax rebate to two other small saving schemes.

The move assumes importance since the Government is looking at increasing household savings to spur investment. Total savings are pegged at over 30 per cent of GDP.

Once popular among the middle-class households, the Post Office Monthly Income Account (POMIA) Scheme lost favour due to scrapping of bonus by the government a few years ago. However, the bonus is now restored at the reduced level of five per cent against 10 per cent earlier.

The bonus would be applicable to new accounts under the scheme from Saturday, a statement by the Finance Ministry said.

Effective yield

“Together with bonus, the effective yield will (under POMIA) be 8.9 per cent as against 8.3 per cent at present. The return of 8.9 per cent compares favourably with the return on bank deposits or government securities of comparable maturity,” the statement added. The Government also extended income-tax rebate to Five Year Post Office Time Deposit Account and Senior Citizens Savings Scheme on the pattern of five-year bank deposits. “Among the small savings schemes, the Five Year Post Office Time Deposit Account and the Senior Citizens Savings Scheme have proved to be popular,” the statement said.

The Centre took the decision after examining requests in this regard with the State governments.

Last month, the Centre invited the state Finance Ministers to send their responses to certain specific proposals. — PTI

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