Since PPF (Public Provident Fund) inception in 1952 interest rates are gradually increased upto 2001. In 1952 PPF Interest rate was 3% and it has gone to 12% in the year of 1989 and remained so until 2001. 49 years there is no decrease in the interest rates. This would have created ultimate trust on many investors. Many would have generated good lumsum on their personal finances. Which is ultimately benefit to the country itself.
But if we see from 2001, except in the years of 2010 (8.5% to 9.5%) and 2012 (8.6% to 8.8%) PPF Rates are decreasing every time. In increasing inflation era it may create negative impression on investors. Subscriber may not opt for PPF just for the reason of decreasing interest rates. Common Man doesn’t have any other alternatives which offers long term plan, EEE tax exemption. Understanding Equity is not easy in terms of Indian Common Man. So it is the common man right to expect either increase in interest rates or at least one constant encouragable interest rate for long time.
It is his right because he is giving his hard earned money with Government. Government should encourage his savings and should support in every way to get that money multiplied. Anyway Government regularly take loans from various funding institutions with some rate of interest. Even though if Rate of Interest of this Funding Institutions is less, that money is going to someone else, sometimes it may be to other countries. Where as in case of PPF that money will goes to the Lower or Middle class Income Indians. Which is best..?
Government spending a lot of money on various welfare schemes. But these benefits are not reaching to the people directly due to corrupted politicians, bureaucracy and brokers. At the same time these welfare schemes not making people responsible. So my intention is rather than spending a large share of budget for fruitless welfare schemes, If the benefit is given to their hard earned money it would be beneficiary to people and government. How much they saves that much they earns.
At last my conclusion to this point is Government should sponsor a Saving Scheme to every citizen which is Riskless, Tax Saving, Inflation beatable and Savings encouragable.