PPF investment ceiling likely to be hiked to boost small savings

PPF investment ceiling likely tobe hiked to boost small savings

The Narendra Modi led-government, which is all set to boost financial savings in the country, is likely to come up with a few more small savings instruments targeted at various segments of the society, including the youth and girl child.

The Centre is considering a proposal to come up with infrastructure bonds and increse the investment ceiling in public provident fund (PPF), sources said.

Finance minister Arun Jaitley is expected to make several announcements in the budget.

The ceiling on PPF investment was hiked from Rs 1 lakh to Rs 1.5 lakh in the last budget.

“The finance ministry is likely to come up with several announcements to boost the savings rate and new instruments could be launched besides infrastructure bonds,” an official source who did not wish to be identified told HT.

There could be more announcements to stabilise the economy and boost savings rate even after the budget, the source said.

“The government is looking at various issues and it is also possible that several announcements and steps are taken even after the budget,” he said.

India’s savings rate, which had peaked at 38.1% of GDP in 2008, fell to 30.1% of GDP in 2012-13. It was 31.3% in 2011-12.

Meanwhile, the Pension Fund Regulatory and Development Authority has urged the finance ministry to grant an exempt exempt exempt (EEE) status for the new pension schemes to make it more attractive. At present it has an EET status — no tax is levied during contribution and accumulation. It is, however, taxed during withdrawal.