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Senior Citizen Scheme-2004 of RBI

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In Panchatantra, Hiranyaka, the rat had the strength to jump a great height to get at the food stored by the hermit. The strength and confidence was becuase of the hoarded back at his hole.

A nice independant income goes a long way in making the life of a senior citizen tolerable; not having to depend upon others for his needs. Old people who have no means suffer, if not physically but mentally for having to look to others - feel so small when asking for something even from the son.

When people retired or got voluntary retirement they collected tidy sums. The next problem was how best to utilize that money to ensure a regular income. Banks were offering a low rate of interest which was not at all attractive.

Enter the villains - many of the old people with money were convinced to part with their money offering huge returns, so called ponzi schemes, and most lost their savings.

It is in this connection, in 2004 Reserve Bank of India introduced the Senior Citizen Saving Scheme where senior citizens were allowed to deposit their funds, up to a maximum of 15 lakhs and an interest of 9.3 per cent for a period of five years extendable for another three years. The interest rates were reduced to 9.0 and then to 8.6 percent during the 2016 budget.

However PM Mr Modi has recently announced a new and novel scheme supposed to be favouring the senior citizens in which an investment of Rs 7.5 lakhs for a period of 10 years and an interest of 8 per cent payable monthly.

It now raises a doubt about the existing scheme. With the announcement of the supposedly new scheme does the Government proposes to do away with the existing scheme? This agrees with the current trend of reducing government spending. The new scheme is in no way superior to the existing one which allows a greater deposit and a higher interest rate. The new scheme is not only a disservice to the Senior Citizens it only saves the government some small value. The main and hidden reason behind the announcement seems to pave way for the scrapping of the existing scheme and thereby reduce the government's burden.

Most of the senior citizens have worked for the country one way or another, many have retired from government service and their contribution cannot be overlooked. It is the duty of the government to ensure that these people spend their evening years in comfort and peace without having to depend solely upon their children. As mentioned above most old people without means feel bad about asking their own children for money for meeting their small needs.

Government should take care of its older citizens and not consider them as a burden. In the interest of the older citizens many of whom have contributed to the development of the country as a whole the Government should do the following:

1. Government should contribute to the welfare of its older citizens.

2. The existing senior citizens savings scheme with the 15 lakhs top limit should be continued with following modifications.

3. The period of investment should be initially 5 years renewable every 5 years.

4. The scheme must be brought as a welfare scheme.

5. The interest rate should be maintained as 9 per cent per annum payable quarterly.

6. As an alternative, the scheme should be managed by the Life Insurance Corporation. They already have a pension scheme which returns a monthly income of Rs 2000. This is a life time service for senior citizens under which the deposit is Rs 2.76 lakhs which is returned to the nominees or legal heirs on the death of the insured. The return works out to approximately 8.5 per cent.

The Prime Minister and the Finance Minister who are also senior citizens with better luck than the ordinary senior citizen should make the old people happy.

 

 



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