Budget FY2023-24: Senior Citizen Savings Scheme, Other Small Savings Plans Set To Get Big Push From Govt

The government has increased the interest rates for Senior Citizen Savings Scheme (SCSS) from 7.6 per cent to 8 per cent for the last quarter of FY2022-23; it was last revised in the October-December period after staying at 7.4 per cent for nine-successive quarters.

Outlook Money
March 4, 2023
Spending Power Of Seniors To Increase By $1 Trillion By 2050

Spending Power Of Seniors To Increase By $1 Trillion By 2050

Small savings schemes like the Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY) will continue to receive a major push from the government in the financial year 2023-24, the State Bank of India (SBI ) said in a report on the expectations from the upcoming budget.


It said the government would continue to rely on small saving schemes like SSY by encouraging new registrations in a mission mode. For instance, it may allow one-time registrations for all leftover SSY cases up to 12 years.

The government had recently raised the interest rates for SCSS accounts from 7.6 per cent to 8 per cent in the January-March quarter in addition to other small savings schemes like the National Savings Certificate (NSC) and the Kisan Vikash Patra (KVP). However, the government has left the interest rates for SSY unchanged at 7.6 per cent, last revised in the April-June quarter of FY2020-21.

The report also highlighted the possible constraints in the economy and GDP growth. The FY24 budget, it said, will present a challenge to the government regarding fiscal consolidation amid declining inflation, making it difficult to set a nominal GDP number higher than 10 per cent, with a deflator of 3.5 per cent. The study said it could also mean a higher GDP growth than anticipated at 6.2 per cent.

It is estimated that in FY23, the total government receipts would be higher than the budget estimate at around Rs 2.3 lakh crore due to higher direct tax receipts of Rs 2.2 lakh crore and higher GST receipts at Rs 95,000 crore. The report, though, expects lower dividends at Rs 40,000 crore, lower fuel tax net of cess at Rs 30,000 crore, and lower disinvestment receipts at Rs 15,000-20,000 crore.

Meanwhile, the expenditure is also likely to be on the higher side at around Rs 3 lakh crore due to higher subsidy bills and additional spending announced by the government.

As a result, the FY23 fiscal deficit is expected to be Rs 17.5 lakh crore. However, the higher nominal GDP growth estimates at 15.4 per cent would help keep the fiscal deficit at 6.4 per cent.

In FY24, it expects the government expenditure to increase by around 8.2 per cent over the FY23 estimates to Rs 46.0 lakh crore. Subsidy bills, which increased significantly in FY23, will probably reduce to around Rs 3.8-4.0 lakh crore in FY24, but capital expenditure is expected to grow by 12 per cent.

Other Key Highlights

· Government receipts (minus borrowing and other liabilities) are expected to grow by 12.1 per cent

· Tax revenue receipts growth likely at 11.0 per cent.

· FY24 Fiscal deficit is estimated to be at around Rs 17.95 lakh crore or 6.0 per cent of GDP , resulting in fiscal consolidation of 40 bps (basis points) from the current fiscal.

· The government’s net market borrowing in FY24 will be around Rs 11.7 lakh crore, and gross borrowings are expected to be around Rs 16.1 lakh crore.

· The states are likely to borrow around Rs 8 lakh crore in FY23, lower than earlier anticipated.

· In FY24, the gross borrowing by the centre and states is likely to be Rs 24.3 lakh crore, up from Rs 22.2 lakh crore in FY23, and net borrowings would be Rs 17.0 lakh crore, up from Rs 16.7 lakh crore in FY23.

· Historically, the spread between the repo and G-Sec averaged 70 bps, thus, with the terminal repo rate expected at 6.5 per cent, the 10 year G-Sec yield could decline to 7.1-7.20 per cent.

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