Introduction
Investing your hard-earned money can oftentimes turn out to be a daunting task. However, despite everything investments are essential in order to ensure one acquires financial freedom, especially to be able to enjoy their sunset years.
Nonetheless, a huge chunk of investors remain worried about losing money in market volatility and hence choose to invest in safer options. In this case, government schemes can come in handy. The Indian government has multiple such investment schemes that offer good enough returns clubbed with security and stability.
The leading government investment schemes include the following
| Name of Scheme | Interest Rate | Lock-in Period | Minimum Limit | Maximum Limit |
| Public Provident Fund (PPF) | 7.1% | 15 years | Rs. 500 (annually) | Rs. 1.5 lakhs |
| National Savings Certificate (NSC) | 7.7% | 5 years | Rs. 1000 | Rs. 1.5 lakhs (annually) |
| Sukanya Samriddhi Yojana | 8.2% | Till child turns 21 | Rs. 250 (annually) | Rs. 1.5 lakhs |
| National Pension Scheme (NPS) | Market-linked | Till retirement | Rs. 6000 | No limit |
| Senior Citizens Savings Scheme | 8.2% | 5 years | Rs. 1000 | Rs. 30 lakhs |
| Atal Pension Yojana (APY) | Variable | Till retirement | Rs 42 (monthly) | Rs. 5000 monthly |
| Pradhan Mantri Jan Dhan Yojana | 4% | None | Rs. 0 | No limit |
| Kisan Vikas Patra | 7.5% | 30 months | Rs. 1000 | No limit |
| Post Office Time-Deposit Account | 6.8 – 7.5% | 1-5 years | Rs. 1000 | No limit |
| Post Office Monthly Income Scheme (POMIS) | 7.4% | 5 years | Rs. 1000 | Rs. 9 lakhs |
What Are Government Investment Schemes?
Government investment schemes are securities that any government introduces to help citizens improve their financial stability. Such schemes are applicable for all citizens across economic standings. All citizens – men, women, working class, business class and even those not working can choose to invest in these schemes.
If you intend to invest in any of these schemes, you can simply a government bank or any post office branch and authorities there will help you begin your investments without any hassles. One of the biggest benefits of investing in government schemes is that it is risk-free while offering guaranteed returns. Some schemes also offer tax deductions thus helping you to save some more money on income tax.
While government schemes can turn out to be one of the better form of investments, it is always a good idea to have a fair enough idea about them, before taking the plunge.
Here’s a detailed look at the major government investment schemes
- Public Provident Fund (PPF)
Usually referred to as the PPF, the public provident fund was launched with an objective to promote small investments by offering reasonable returns. The current interest rate is 7% and it makes for a popular choice for individuals looking for secure investments along with tax benefits.
A PPF scheme is open for every Indian citizen; an account can be opened on behalf of a minor as well. Minimum amount required is Rs. 500 to a maximum of Rs. 1.5 lakh annually. While loan facilities can availed from the 3rd till the 6th year, partial withdrawal becomes effective from the 7th year. It comes with a lock-in period of 15 years which can be further extended. Also, deposits made towards PPF accounts qualify for tax deductions under Section 80C of the Income Tax Act.
- National Savings Certificates
A tax-saving investment scheme, National Savings Certificates (NSC) was launched by the government to encourage savings among lower and middle-income groups. According to Section 80C of the Income Tax Act, you can save taxes up to Rs. 1.5 lakhs per annum by investing an NSC spanning for 5-years. However, unlike PPF, you must get a new certificate, i.e., open a new account every time you invest in an NSC. It offers an annual interest rate of 7.7% and comes with a lock-in period of five years.
Upon maturity, you receive the compounded returns along with the principal amount. This is a comparatively low-risk scheme with the interest rates getting revised every year.
- Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana was launched in 2015 by the Narendra Modi Government to promote education of the girl child. It is run jointly by three ministries – the Ministry of Women and Child Development, Ministry of Human Resource Development and the Ministry of Health and Family Welfare.
Primary aim of the scheme is to ensure survival and protection of the girl child and also bring about a balance in the sex ratio of the country. Only, one account per girl child and a maximum of 2 accounts per family is allowed. While the minimum investment amount is Rs. 250 per annum, the maximum is slated at Rs. 1, 50,000. Parents are required to invest every year until the child turns 15. The scheme will mature only after the child turns 21 and the money can be used for her higher education or marriage.
- National Pension Scheme
National Pension Scheme (NPS) is a retirement investment scheme launched by the Indian government to offer long-term savings and provide retirement benefits. This scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
Under the NPS scheme, subscribers can contribute a certain pension amount every year till they turn 60 and enjoy regular pension for a lifetime beginning from the time they retire. All Indian citizens including NRIs aged between 18 and 60 can opt for NPS. However, NRI accounts will be shut down, if applicants change their citizenships.
The minimum investment amount is Rs. 6000 whereas there is no upper limit on the maximum amount to be invested. In case you fail to pay the minimum investment amount, your account will get freezed. You must actively contribute towards NPS throughout its tenure or until you turn 60. Upon turning 60, you must use up at least 40% of the matured corpus to buy an annuity plan, which will pay out a regular pension throughout your life.
NPS investments qualify for tax deductions under sections 80C and 80CCD. A maximum limit of Rs. 1.5 lakh is allowed under Section 80C and another Rs. 50,000 is allowed under Section 80 CCD.
- Senior Citizens Savings Scheme
As the name suggests, Senior Citizen Savings Schemes is a government savings option targeted at senior citizens that pays out regular interests to its account holders. The scheme was launched with a primary aim to provide senior citizens with a regular source of income. In this scheme, applicants can invest a lump sum amount either individually or jointly and receive regular income in the form of interest payments.
An SCSS account can be opened either in the post office or any authorized banks with a minimum amount of Rs. 1000 and a maximum of Rs. 30 lakhs. An individual account or a joint account can be opened provided for the latter, both the applicants are above 60. One can also choose to open multiple SCSS accounts provided the total investment amount across all accounts remains constant at Rs. 30 lakhs.
To be able to invest in the SCSS scheme, you either need to be 60 or above or 55 and below 60 years of age if you are a civilian. The investment is made within one month, post retirement.
To be continued in Part 2
By Sampurna Majumdar
Sampurna Majumder is a communications professional born and raised in Kolkata. Fascinated by creativity from a young age, she has a deep love for music, literature, and world cinema. An avid reader and traveler, she holds a Master’s degree in Literature from the University of Delhi.
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