Centre may not extend Mahila Samman Savings Certificate scheme beyond March 2025

The government funds its fiscal deficit through a mix of borrowings from the bond market, proceeds from small savings, and draw down from cash balance.

The Centre has no plans of extending the Mahila Samman Savings Certificate, a one-time scheme available for two years, from April 2023 to March 2025, a senior government official said.

The budget for 2023 announced the scheme with the aim to encourage the habit of savings among Indian women and fetched depositors an annual interest of 7.5 percent.

India's good run with small savings scheme collections have been primarily driven by two plans - the Mahila Samman Savings Certificate, and the Senior Citizen Savings Scheme where the government raised the maximum deposit to Rs 30 lakh from Rs 15 lakh in the budget for 2023-24.

The official said that schemes such as the Mahila Samman Savings Certificate, Senior Citizens’ Saving Scheme and Sukanya Samriddhi Yojana have been top performers, but inflows from these plans may plateau going ahead prompting the Centre to target lower collections from the National Small Savings Fund (NSSF) in FY25.

“First, there was a shortfall of Rs 20,000 crore in NSSF collections in FY24. So, we start with a low base. Second, we got a good flow from doubling of senior citizens’ scheme. Last year it gave us a bonanza of Rs 1.12 lakh crore. But this will plateau. We are not expecting such a surge this time,” the official said.

The Union Budget 2024-25 tabled in July pegged the NSSF collections at Rs 4.20 lakh crore for this financial year, lower than Rs 4.67 lakh crore in the interim version.

Another reason for anticipating lower mop-up from NSSF is a shift seen among households to equity markets and mutual funds owing to attractive returns.

“We have consciously accepted this fall in NSSF collections, and kept market borrowings at the same level,” the official added.

The government funds its fiscal deficit through a mix of borrowings from the bond market, proceeds from small savings, and draw down from cash balance.

In the budget, the government reduced gross borrowing by Rs 12,000 crore to Rs 14.01 lakh crore for the fiscal year, and cut the fiscal deficit target by 20 basis points to 4.9 percent.