No attempt to kill Small Savings Schemes: FM

New Delhi, May 7: Dismissing charges by the Left that the government was out to finish the Small Savings Schemes, Finance Minister P Chidambaram gave a categorical assurance that the interest of the depositers would be fully safguarded and said net collections under the schemes were positive.

"I cannot direct the depositers to put their money only in small saving schemes in Post Office, when the number of savings instruments in the market today are manifold", Mr Chidambaram said in his reply to the Calling Attention motion moved by CPI veteran Gurudas Dasgupta.

The debate on small savings in the House saw a literal clash of titans with charges being hurled at the Finance Minister by Mr Dasgupta and Mr Chidambaram using his tact, legal skills and oratory to repeatedly state that he would not get provoked under any circumstances.

In a sharp attack, Mr Dasgupta held Mr Chidambaram as being solely responsible for the recent electoral defeats of the ruling Congress party by insisting on pursuing anti-peoples policies and inability to contain inflation.

The Left leader charged that the government was out to gradually kill the small savings schemes so that money instead flowed into the stock markets and other speculative activity.

Mr Chidambaram said net collections, gross collections minus withdrawals, which includes redemptions on maturity in each financial year, of small saving instruments were up by four per cent during the last financial year.

At this point, Mr Dasgupta was up on his chair demanding figures for net ecollections under the schemes.

Mr Chidambaram obliged him, saying that net collections under these schemes in 2006-07 were of the order of Rs 1,56,000 crores and withdrawals including monies returned on maturity were to the tune of Rs 1,11,000 crores. Thus, the net collections were up by as much as Rs 45,000 crores.

Mr Chidambaram said any increase in the small savings deposit rates will require a concomittant increase in the lending rates to the States. ''The State governments have not been comfortable with the existing rate of 9.5 per cent for five years (including a moratorium of five years) and any increase thereof will be resisted by them as the high debt servicing cost would undermine their efforts at achieving fiscal corections'', he said.

The Finance Minister said the State governments had also expressed their inability to avail of 100 per cent of the net collections from the respective States.

''There is no evidence of any outflows of deposits from the Small Savings Schemes'', Mr Chidambaram said.

Mr Dasgupta wanted to know as to why interest rates on small savings schemes were only eight per cent while Commercial Banks were procuring funds from large Corporate houses at 13 per cent to 14 per cent.

Earlier, Mr Dasgupta charged that the real intention of Mr Chidambaram was to push money out of small savings savings schemes into stock markets by taking recourse to both mutual funds and direct purchase of equities and asked the Finance Minister not to use the complicated logic of the State governments to justify his policy on these savings instruments. ''This is merely an escape route'', he said.

Time and again, Mr Dasgupta dared Mr Chidambaram to explain as to why these schemes were dying and emphasised that they attracted the largest deposits from the ''poor, semi-poor and the not-so affluent middle class.'' ''They provide an assured return which is a safe and steady stream of income to serve the interests of the common man in contingenies, during old age and important occasions like marriages and education of their offspring.'' Mr Dasgupta alleged that the government in a poor nation was promoting five star culture, unmindful of the popular discontent among the masses and the political cost to the Congress party.

''I hope good sense will prevail on the ruling party after the results of the Uttar Pradesh electoral polls are out'', he said amid peals of laughter in the House.

UNI