The latest decrease will discourage small investors to put more money into these schemes.
ISLAMABAD: The government has reduced the interest rate on NSS certificates to the tune of 1.25 per cent. This is bad news for the government, as well as for the NSS clients, for several reasons. The said rates should have been increased instead of bringing them down. The latest decrease will discourage small investors to put more money into these schemes. Some of them may even be tempted to withdraw their savings. The profits that are offered on the certificates are already quite low considering the alarming rise in inflation and the erosion in the value of the capital of the beneficiaries of these saving schemes.
In addition, slashing profit rates on the NSS certificates at a time when elections are near will also harm the government. It does not appear to be a decision taken by the well-wishers of the government. Moreover, frequent changes in interest rates create uncertainty, which is harmful for any economy. The decision should be reversed to enable the poor investors to make ends meet.
Bashir Malik
Published in The Express Tribune, August 28th, 2012.
