Small savings net collection dips

From January to September this year, the gross small savings collections were to the tune of Rs 1.83 lakh crore, while the withdrawals were Rs 1.96 lakh crore, leading to a negative net collection of Rs 13,000 crore, Finance Minister Pranab Mukherjee informed the Lok Sabha..

He also said that lower collections may lead to lower loans to states, which will have to make good from other sources of financing.

Loans from National Small Saving Fund are one of the sources to finance the annual plans of the states. Small savings schemes play a crucial role in public finance and they form a significant part of the internal liabilities of the Centre.

The accretions through small savings schemes are also used in financing a part of the fiscal deficit of the government, which has zoomed past 70 per cent of the full year target in the first half (April-September) itself. The policymakers expect it to breach the 4.6 per cent of GDP target for the fiscal year. The government usually funds the deficit through its borrowings, surplus cash and small savings collection.

The small savings, however, declined to the tune of Rs 27,000 crore in the first quarter (April-June) of the fiscal, prompting the government to announce an extra borrowing of Rs 52,900 crore to mitigate its lower cash balances. 

Data from 2008 to 2010 reveals that the gross collections were close to Rs 7 lakh crore, while withdrawals stood close to 6 lakh crore.