Small savings schemes like PPF, NSC, Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Yojana are considered very reliable options for common investors in India. The government reviews their interest rates every quarter, but there has been no change in them for a long time. In such a situation, the question arises that when inflation is increasing, will the interest on these schemes also increase?

Actually, the interest rates of these schemes are decided on the basis of many economic factors. The most important role is played by government bonds i.e. G-Sec yield. The interest of these schemes is fixed around the rate at which the government takes loan from the market, so that investors can get slightly better returns.

Inflation also plays an important role in this. When inflation increases, there is usually pressure on interest rates. However, it is not necessary that its impact be seen immediately on small savings schemes. Currently, inflation in February 2026 is around 3.21%, which is within the RBI target of 4%. In such a situation, the current interest rates ranging from 7% to 8.2% are giving good real returns to investors. For this reason, the government often does not change interest rates in a hurry. Especially because a large number of senior citizens and retired people depend on these schemes. Keeping their income stable is also the priority of the government.

Expert opinion

In an ET report, Adhil Shetty says that the government keeps the interest rates of small savings schemes around their cost of borrowing i.e. G-Sec yield, to which a little premium is added so that these schemes remain attractive for common investors. Whereas Foram Naik Sheth says that the impact of inflation is indirect. When inflation increases, an environment of increase in interest rates is created, but as long as inflation is under control, there is no need for major changes in the rates of small savings schemes.

Apart from this, these schemes are also an important means of raising funds for the government. If interest rates are suddenly increased, it may become expensive for the government to take loans. Therefore, changes in interest rates are always done thoughtfully and gradually. Overall, looking at the current situation, it can be said that despite the increase in inflation, there is little possibility of any immediate change in the interest rates of small savings schemes. These schemes still remain a good option for investors giving safe and stable returns.