Small savings, big impact: Reversal drama, poll and economy risks explained

In a jolt to savers, the Finance Ministry had on March 31 reduced interest rate by up to 1.1 per cent across various small savings schemes, including the National Savings Certificates (NSC) and Public Provident Fund (PPF). However, Finance Minister Nirmala Sitharaman on April 1 said the government will withdraw orders to cut the interest rate on small savings schemes and assured to restore the rates to the last quarter of the financial year ending on March 31. The Opposition hit out at the government saying one can imagine the functioning of the economy when such duly approved order affecting crores of people can be issued by an "oversight". But why is small savings so important? In this video, Business Standard's Subhomoy Bhattacharjee talks about the importance of small savings in the context of the rate of interest and the public perception.