Last week’s interest rate cut on small savings schemes—which was later revoked—wasn’t the first cut. It won’t be the last.
For the past two decades, successive governments have been trying to walk the tightrope between financial inclusion and fiscal prudence. Government-backed small savings schemes offer a safe and attractive investment avenue for small investors and a capital pool for governments to tap into. But it is an expensive capital pool given the wide difference between market rates and the rates offered in many of these schemes.
