Centre firm on FY24 market borrowing target, estimates high mop up from small savings schemes too: Sources

The government is betting big on collections from small savings given the substantive changes made to certain schemes in the FY24 Budget.

The government has doubled the deposit cap for the Senior Citizen Scheme from Rs 15 lakh to Rs 30 lakh annually, while deposit caps for the Monthly Income Scheme too have been doubled, both for individual and joint accounts

Government officials said the expected robust mop up from small savings will help them stick to the net market borrowing aim of Rs 11.81 lakh crore set out in the FY24 budget.

Internal projections of the government show the Senior Citizen Savings Scheme alone is likely to garner an additional Rs 75,000 crore in FY24, which works out to a significant 0.25 percent of the nominal GDP base factored for next year’s budget estimates.

Officials said this would be possible with just 50,000 of the existing senior citizen accounts opting to double their savings deposits , which is barely 1 percent of the total senior citizen accounts holding deposits of Rs 15 lakh each.

Officials said this coupled with the expanded scope of MIS and the new small savings instrument for women — Mahila Sammaan Savings Certificate — with a deposit cap of Rs 2 lakh and a partial withdrawal facility, the government is more than comfortable with its net market borrowing aim for the next financial year.

Small savings has been an important source of financing the Centre’s fiscal deficit and despite higher interest cost, the government has been actively promoting these collections to finance the fiscal gap , instead of relying on larger market borrowings. Slightly over 30 percent of the FY24 fiscal gap of Rs 15.43 lakh crore is projected to be funded by small savings collections.