|
|
|
Senior citizens need govt support for social security: SBI Ecowrap
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 16 Apr, 2021
With country's population of old set to double over the next few
decades, government should look to provide complete tax waiver on senior
citizen savings scheme (SCSS) and help the elderly build some sort of
social security, said the SBI Ecowrap report.
According to the
report, the share of India's elder or senior citizen population is
increasing from 8.6 per cent in 2011 to 15.9 per cent in 2041. This, the
report said, will pose a huge challenge for policy making at social and
economic levels and, therefore, it is necessary to build incentives
around small savings schemes, which are most popular form of financial
savings of households in India.
The report, authored by SBI group
chief economic advisor Soumya Kanti Ghosh, suggested complete tax
waiver on SCSS to provide more money into the hands of senior citizens
in the absence of any comprehensive social security scheme, like the
ones existing in the West, for this section of the population.
The
interest on SCSS is fully taxable. The February 2020 outstanding under
SCSS was Rs 73,725 crore. If the amount is given full tax rebate/up to a
threshold level it will have nominal impact on the exchequer, the
Ecowrap report said.
The report said that interest rates offered
on deposits in India are also demography agnostic (barring the separate
rate for senior citizens). However, going forward, the report said, this
approach should shift to an age- wise interest rate structure, with
rates linked to long-term bank deposit rates till a certain age group,
and offering a higher than market rate over that age group.
"This
could, in one go, serve the multiple purposes of ensuring a lower
lending rate structure, adequate returns for senior citizens, lower
interest expenditure and an alternative to floating rate deposits," the
Ecowrap report said.
Furthering the cause for senior citizens for
a wholesome financial security after the active service life, SBI
Ecowrap has also suggested that the government should maintain parity in
interest rates between organised sector/EPF and unorganised/PPF.
It
said that as small savings scheme (SSS) rates are adjusted in every
quarter, the government should ideally remove the 15 year lock-in period
for the PPF and give the investors the option to withdraw their money
within a stipulated time.
The report also brought about interning
aspect of SSS. According to it, the post-office savings deposits are
negatively correlated to per capita income while bank deposits are
positively correlated with per capita income. This indicate that poor
people are more reliant on post-offices for their savings and when the
income increase they shift to bank deposits first and not to financial
products.
That's why the proportion of post-office deposits in
Maharashtra & Delhi, where per capita income is very high is only 60
per cent.
Moreover, in states with low per capita income like
West Bengal, Uttar Pradesh, Rajasthan and Bihar, the elderly population
of 60+ has a clear preference to invest in post office saving deposits.
Also,
what has sparked this large interest in small savings. The report said
this can be found after seeing the trend of last 20 years data on gross
small savings collections. In this, a structural break is clearly
visible in 2008-09. The share of different states in gross small saving
collections were declining till the global financial crisis. However,
post the financial crisis in 2008, there has been a significant jump in
preference for post office savings. This jump is maximum in low income
states like West Bengal and even in high income states like Maharashtra.
Fourthly,
the report said, the huge post-office collections in states like West
Bengal and Uttar Pradesh and the preponderance of Kisan Vikas Patras
(indicate the lack of financial literacy for the products like mutual
funds, etc. particularly in West Bengal, sometimes the left of political
ideology that everything that market does is bad in fact results in
asymmetric results with poor people investing more in chit funds, etc.
the live example of this is the Rs 20,000-30,000 crore Saradha scam.
Most of the times these types of scams are also the product of political
dispensation.
"We believe the Government has taken the best
decision of not changing the rates on small saving schemes as we are
currently going through an unprecedented pandemic crisis," said the
Ecowrap report.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|