Business   

NSS deposits show a downward trend

KOCHI: For the first time since the National Savings Scheme (NSS) was started in 1968, the net deposit under the schemes in the State will be reflected in the negative. Till December 2007, the total gross deposit was Rs.2,910.89 crore while the net deposit was Rs. (-)287.20 crore, indicating a total withdrawal of Rs.3,198.09 crore.

This has put the State treasury into a tizzy, leaving many developmental programmes on hold. The State budget had been depending on the deposit generated under the NSS as part of the funds for developmental programmes till now.

The downward trend in the scheme started since the interest rates were cut lower than the rates available in the commercial banks. While the interest rates in banks had been changed for better, no changes were made for the NSS since the last three years.

The negative trend in the deposits had been realised early in the financial year when it dipped below zero during April-May 2007 showing a net deposit of Rs. (-) 43.4 crore. There was a gross deposit of Rs.625.9 crore and withdrawals of Rs.669.3 crore during the two months.

After the NSS had a record deposit in 2003-04, achieving 112.35 per cent of target of Rs.2,200 crore, amassing Rs.2,471.62 crore, there had been a slide down henceforth.

In 2004-05, 65 per cent of the target of Rs.3,250 crore was achieved with a net deposit of Rs.2,124.55 crore and in 2005-06, 71 per cent of the same target of the previous year was achieved with a net deposit of Rs.2,305.03 crore. However, the scheme saw the danger signals in 2006-07, with only 33 per cent achieved of the downsized target of Rs.2,950 crore, with a net deposit of Rs.986.62 crore.

It was for the first time that the NSS target for the year in 2006-07 was lowered than the previous year.

This was further lowered in 2007-08 with a target of Rs.2,700 crore. Isaac George, Director, National Savings Department, said the government had appealed to the Union government to restore the earlier edge of interest rates enjoyed under the NSS. The downward trend in NSS was reflected in most of the States, though in case of Kerala, it probably affected more, as the government banked much on the funds generated through the scheme.

The funds generated in these schemes go into the public account of the Union government, which allowed the State a loan from it.

The attractive part of the loan was the repayment period of 25 years and a repayment holiday of five years in payback.

The slide had made the Finance Ministry to put a freeze on many programmes as it had to go for the Reserve Bank’s Ways and Means Funds for meeting the State’s expenditure.

Recurring Deposit, Monthly Income Scheme, NSC VIII issue, Kisan Vikas Patra, Time Deposit, Public Provident Fund, Senior Citizen’s Savings Scheme, NSS 87 and NSS 92 are the various schemes under the National Savings Scheme.

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

Cos. race against time to finish jobs
A trimming exercise looms large
Hard lessons from the primary market fiasco financial scene
PPF accounts for joint families
No extension for relief u/s 80C
Budget: looking for supportive tax laws
Early annual maintenance shutdown likely for FACT
NSS deposits show a downward trend
Poor fish harvesting

Copyright © 2008, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu