The Indian rupee. Photo: AFP
The Comptroller General of Accounts' data for April 2020 show that the federal government's share of tax collection during April was 167 billion rupees (US$2.21 billion) compared with 553 billion rupees in the previous year. Photo: AFP

In a relief to fixed-income investors, the Indian government has raised interest rates on small savings schemes, including National Savings Certificates (NSC) and the Public Provident Fund (PPF), by up to 0.4 percentage point for the October-December quarter, in line with rising deposit rates in the banks. Interest rates for small savings schemes are notified on a quarterly basis.

The rates have remained unchanged in the two previous quarters and in the January-March quarter they were reduced.

The new rates will come to effect from October 1 and end on December 31. The interest rates for five-year term deposits, recurring deposits and the Senior Citizens Savings Scheme have been raised to 7.8%, 7.3% and 8.7% respectively. However, interest on savings deposits has been retained at 4% per annum, Press Trust of India reports.

PPF and NSC will fetch an annual interest rate of 8%, compared with the existing 7.6%, while Kisan Vikas Patra (KVP) will yield 7.7% and mature in 112 months as against 118 months in the previous quarter. Term deposits of one to three years will fetch a 30-basis-point higher interest rate, the news agency added.

Earlier, the Reserve Bank of India also increased the repo rate cumulatively by 50 basis points in its last two bi-monthly monetary policies announced in June and August.