NEW DELHI, NOV 19: Interest rate on provident funds (PFs) and national small savings schemes (NSSs) is likely to be cut by two percentage points in the coming days.A suggestion to this effect was made by Deputy Chairman of the Planning Commission K C Pant to the Prime Minister recently and the Government is considering the proposal.According to the note prepared by the Planning Commission for the PMO, such a move will reduce the cost of the Government borrowings and also interest rate for the economy and thus strengthen economic revival.The note has said that State governments who depend upon national small savings could be given a package involving 100 per cent of net incremental small savings collections instead of 75 per cent at present.The reduced inflow into the Central Government Budget which will thus accrue could be made up through an expanded market borrowing at lower rates of interest. The note has suggested that the step be taken before the next Budget.The note was prepared by thePlanning Commission on the direction of the Prime Minister who is also the Chairman of the Commission so as to suggest him measures to bring about economic revival.However, any such move is not going to be welcome by the average common man for whom major portion of savings come from these two means.In fact, the manifesto of the National Democratic Alliance (NDA) had promised to allow these funds to invest in stock markets to yield a higher rate of interest.Another recommendation made is to substantially hike railway passenger fares before the next Railway Budget by linking such a move to increased requirement on safety measures. To make increases in railway fares a smooth process and delink it from political judgment, the recommendation has been made to go for automatic indexing of both passenger fares and freight rates to reflect increases in fuel and other input costs.Quite a similar method is used for adjusting petro prices like that of diesel where whenever crude oil prices go up in theinternational markets, domestic prices have to be adjusted accordingly.In the case of railways if such a move comes through, whenever input costs like that of fuel etc will go up, the Government will automatically have to adjust fares according to it.The note to the PMO has also suggested that to streamline the present system of disinvestment, a specialised unit for it be created which can be located either in the PMO, or in the Finance Ministry or in the Planning Commission, which would work in close collaboration with the Disinvestment Commission.The recommendation is that once a public sector unit is approved for disinvestment by the Cabinet, its administrative control should shift from the concerned administrative ministry to the proposed special unit.
