The slashing of interest rates on small-savings instruments, and then the overnight reversal of the decision, has left investors bewildered. It has also led many to believe that the respite may only be temporary.
Cuts are likely: Most experts, too, believe it is only a matter of time before small-savings instruments’ above-market returns are pruned. Says Ankur Maheshwari, chief executive officer, Equirus Wealth Management: “The government wants lower interest rates within the economy. The existing rates have been retained for only a quarter, so they may be reconsidered once that period is over, or a little later.”
The Shyamala Gopinath Committee had earlier created a framework for deciding small-savings rates. According to it, the average yield on government securities