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What are Small Savings Schemes (SSSs)?
- An important component of India’s financial savings scenario is the large-scale participation of general public through various small saving schemes initiated by the central government.
- In this context, the Small Saving Schemes (SSSs) are important source of household savings in India. Different small saving schemes have mobilized money from households and channelized it to government so that the centre and states can finance a part of their expenditure.
- The Central Government operates Small Savings Schemes (SSS) through the nationwide network of about 1.5 lakh post offices, more than 8,000 branches of the Public-Sector Banks and select private sector banks and more than 5 lakh small savings agents.
The Small Savings Schemes can be grouped under three:
(i) Post office Deposits: Post Office Savings Account, Post Office Time Deposits (1,2,3 and 5 years), Post Office Recurring Deposits, Post Office Monthly Account,
(ii) Savings Certificates: National Savings Certificate and Kisan Vikas Patra
(iii) Social Security Schemes: Public Provident Fund, Senior Citizens Savings Scheme, and Sukanya Samriddhi Account.
National Small Savings Fund (NSSF)
- National Small Savings Fund (NSSF) was established in 1999 within the Public Account of India for pooling the money from different Small Savings Schemes Collections from all small savings schemes are credited to the NSSF.
- Similarly, withdrawals under small savings schemes by the depositors are made out of this Fund. The money in the account is used by the centre and states to finance their fiscal deficit.
- The balance in the Fund is invested in Central and State Government Securities. Pattern of utilization of the fund among the centre and states is decided from time to time by the Government of India.
- Objective for the formation of a dedicated fund for small savings is to de-link small savings transactions from the Consolidated Fund of India.
- Since NSSF operates in the Public Account, its transactions do not impact the fiscal deficit of the Centre directly. As an instrument in the public account, the balances under NSSF are direct liabilities and constitute a part of the outstanding liabilities of the Centre. The NSSF flows affect the cash position of the Central Government.
Administration of Small Savings or NSSF
The NSSF is administered by the Government of India, Ministry of Finance under National Small Savings Fund Rules, 2001, which is derived from Article 283(1) of the Constitution.
- Funds collected under SSS are the liabilities of the Union government accounted for in the Public Accounts of India and the government acts like a banker or trustee.
Importance of small savings schemes
- Small saving schemes helps to support the social security objectives at the same time, helping as a tool of resource mobilization for the government. Several small saving schemes like Senior Citizens Savings Fund, Sukanya Samridhi Yojana and PPF are supporting social securities of different sections. Government also gives slightly high interest rate for these schemes compared to the average interest in other financial instruments.
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