Professor J.D. Agarwal, Professor of Finance and Chairman, Indian Institute of Finance has urged the Government to reconsider the interest rate on small savings.

According to him, the Interest rate on small savings including NSC, PF, PPF should be revamped upwards as there is no social security programme available in the country for people in service. A survey of retired servicemen both in government and public sector clearly indicates that they face serious financial problems after a couple of years of their retirement. Many of them have even been selling their properties to manage their household affairs, which they built couple of years before their retirement. Dr. Agarwal has appreciation for the Government's concern to manage the revenue and fiscal deficit within a reasonable level and also in reducing the servicing of the debt by reducing the interest rates on government securities. But affecting millions of servicemen adversely is no way to manage revenue deficit. According to him, there are creative solutions available to finance various projects and schemes outlined in the Common Minimum Programme and keep the fiscal & revenue deficit under control.

The Budget must reflect an appropriate concern or the social welfare of the people. Dr. Agarwal reiterated that massive profits declared by banks indicate exploitation of the depositors by these banks. The Interest rate on deposits should be raised, while the prime lending rate reduced so as to offset the wide gap between them. The current wide gap between Prime lending rate and the interest offered by banks on deposits is too wide and exploitative in nature. The banks should be able to operate at the present level of efficiency with gap of maximum of 2% between interest offered to depositors and PLR. In developed countries banks operate and make profits with a gap of only 1 %.

He has urged that the Finance Minister should take into consideration the plight of millions of small depositors as well as the industry so as to boost growth & investment to generate greater employment in the economy.