NEW DELHI: The interest rate cut on small saving schemes announced on March 31 and which was withdrawn hours later by Union Finance Minister Nirmala Sitharaman as an "oversight" had the go-ahead of both the ministry as well as the Election Commission (EC), an RTI application filed by this newspaper revealed.
The RTI reply disclosed the swift movement of letters between the Department of Economic Affairs (DEA) and the EC. The DEA had to seek clearance from the EC as the Model Code of Conduct was imposed due to Assembly polls.
Details of communications between the DEA and the EC received through RTI revealed that the DEA had written to the EC on March 31 seeking its approval on the rate cut. The letter, which was in the "most immediate" category, was sent to the EC with the subject “revision of interest rates for small saving schemes”.
"For the first quarter of FY 2021-22 starting from April 1 and ending on June 30, the rates have been revised with the approval of Hon'ble FM, as per the confidential draft enclosed," said the DEA letter.
The letter also said the elections have been announced and the MCC have been imposed, and in that case, the EC’s approval will be required for all policy decisions. It concluded with a line in bold letters saying, "The matter may be treated as urgent as the revision has to be affected from 1.04.2021."
Considering the issue as urgent, the EC responded the same day with a go-ahead. "There is a structure inside the commission to respond within 24 hours. The panel has to give reply to urgent important matters either deny or accept or clarify," former chief election commissioner OP Rawat said.
He added that there is a provision in the MCC to not stop any policy-related issues at the national level in case of assembly polls. "There was no need to seek permission in that particular case (saving interest rate revision)," he said.
Rawat said earlier, a lot of such issues used to flood the panel during polls for seeking permissions. However, in 2017, it was decided to form a committee headed by the chief secretary of states. The EC letter addressed to the secretary, Ministry of Finance, (DEA) read: "The Election Commission has no objection, from the MCC angle to the revision of interest rate for small saving schemes and issue of its notification subject to the conditions that no undue publicity should be given and no political mileage may be derived out of it."
While the ministry had cut the interest rate of small saving schemes on March 31 and uploaded the order on the website in the late evening, Sitharaman tweeted about the withdrawal of the revision on April 1 at 7:54 am.
Small saving schemes include Sukanya Samriddhi Yojana, Public Provident Fund, Kisan Vikas Patra and others. Officials said as four states and one UT were amid Assembly polls, the timing of the rate cut was probably seen as counter-productive and the order was withdrawn.
Finance minister took to Twitter to clarify
While Finance Ministry had cut interest rate of small saving schemes on March 31 and uploaded the order on the website, Sitharaman tweeted about the withdrawal of the revision on April 1. "Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, i.e. rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn," she said