The discontinuance of popular tax-free saving bonds with coupon rate of 6.5% per annum, withdrawal of the Section 80L provision carrying interest exe-mption on bank deposits and other specified securities, the pulling out of post-maturity bonus at 10% on the flagship MIS scheme of post offices and declining interest rates on fixed deposits have added to the woes of individual retail investors.
Except, perhaps, those few who have preferred to access the mutual fund route to look for balanced investment in debt and equities. A majority have opted to park their money in savings accounts in the hope of investing soon in a deposit scheme that offers the highest returns, safety and liquidity.
Budget 2006 proposed tax sops for investment in bank deposits with a three-year lock-in period. The proposal has serious drawbacks, as it is subject to the overall investment ceiling of Rs 1 lakh u/s 80C along with other contractual saving instruments. Second, the three-year lock-in period cannot be escaped even by paying penalty. It is the interest rate and not the tax rate or rebate that requires a boost.
Time and again, some brilliant minds have emphasised the need for a more credible and human model than what economic theory has been able to provide. Their atte-mpts have failed. If the economists are lazy, why try collaborating with them. Think-ers like Arun Maira (May 17) should also note that trust, confidence, perceptions, corporate social responsibility, etc are part of the economic rationality mod-el. Leaders of nations and corporations can usurp the authority of citizens to decide whether their monies should be spent on so-called social responsibility.