The Bharatiya Mazdoor Sangh, a trade union affiliated to the BJP, has urged the Union government to reconsider its decision to lower interest rates on small savings schemes such as the PPF. The BMS said on Saturday that a market economy was not appropriate for India, and lower interest rates would hit deposits in banks as well, reducing their ability to lend.
“The government has said that this decision is part of its strategy to bring the interest rates on small savings schemes in line with market rates, [but] small savers are disappointed with this. This will also dent bank savings, as if interest rates are lower, why would people park their savings with them,” BMS general secretary Virjesh Upadhyay said.
Industry hoped the move would lead to lower credit costs for borrowers.