Centre aims to mop up Rs 75,000 cr from senior citizen savings scheme

Not to overshoot FY24 net borrowing target of Rs 11.8 trn

The maximum investable amount of the senior citizen savings scheme (SCSS) — enhanced from Rs 15 lakh to Rs 30 lakh in the Union Budget 2023-24 (FY24) — could mobilise Rs 75,000 crore. This will help the government avoid overshooting the projected net market borrowing of Rs 11.8 trillion for FY24, said a government source.
 

According to government sources, there are 5 million accounts under SCSS, of which 500,000 had hit the previous upper limit of Rs 15 lakh.

“If just 10 per cent of account holders increase their deposits to Rs 30 lakh, that will mobilise Rs 75,000 crore. With the kind of allocation made to the Indian Railways, the National Highways Authority of India (NHAI), and state governments, there is no reason for them to come to the market,” said a government official.

“As a result, the Rs 11.8 trillion of net borrowing in the next fiscal year will not be breached. The higher allocation to the Railways and highways will also crowd in private investment,” added the person.

In the Budget, the government announced record capital expenditure of Rs 2.6 trillion for the next fiscal year. The government’s share will contribute around Rs 2.4 trillion — the highest ever — with Finance Minister Nirmala Sitharaman saying the outlay was nearly ninefold 2013-14’s.

The allocation to NHAI has been increased to Rs 1.62 trillion.

In the Budget, the government announced a gross market borrowing of Rs 15.4 trillion and a net market borrowing of Rs 11.8 trillion, which were largely in line with expectations.

The gross borrowing for the current fiscal year (2022-23, or FY23) is Rs 14.21 trillion, while net borrowing is Rs 11.19 trillion.

The fiscal deficit target for FY24 has been pegged at 5.9 per cent of gross domestic product (GDP).

While the government has adhered to fiscal consolidation by bringing down the fiscal deficit target from 6.4 per cent in the current year, there are concerns about a possible loss of growth momentum affecting the government’s revenue streams.

The Reserve Bank of India has projected India’s GDP growth rate at 6.4 per cent for FY24, lower than the growth projection of 6.8 per cent for FY23.

The central bank said while strong prospects for agricultural and allied activities will boost rural demand, external demand will likely slow due to a weak global environment.

In addition to SCSS, a one-time new small savings scheme — Mahila Samman Savings Certificate — was also announced in the Budget. The scheme will be in force for a two-year period up to March 2025. The scheme will offer a deposit facility of up to Rs 2 lakh in the name of women/girls for a tenure of two years at a fixed interest rate of 7.5 per cent with a partial withdrawal option.