The Centre’s decision to reduce interest rates on small saving schemes came for a sharp criticism from senior Congress leader P Chidambaram who demanded its rollback on Wednesday. He described it as a wrong step based on “stupid advice”.

He questioned the timing of the government’s move during the  21-day nationwide lockdown  when its priority should be saving people from the COVID-19 pandemic rather than focusing on the economy. He said, “though India’s GDP for the last quarter could not be have been more than 4 per cent, it was time to focus on saving people’s lives and not the GDP.”

In a series of tweets Chidambaram said, “I know that sometimes government acts on stupid advice, but I am amazed how stupid this advice was. While reducing the interest rate on PPF and small savings may be technically correct, it is absolutely the wrong time to do so.”

I know that sometimes government acts on stupid advice, but I am amazed how stupid this advice was!

— P. Chidambaram (@PChidambaram_IN) April 1, 2020

The former finance minister said in times of acute distress and uncertainty about income, people depend on the interest income on their savings.

“Government must reconsider immediately and restore old rates until June 30,” he said.

In times of acute distress and uncertainty about income, people depend on the interest income on their savings.

Government must reconsider immediately and restore old rates until June 30.@narendramodi @PMOIndia @nsitharaman @nsitharamanoffc

— P. Chidambaram (@PChidambaram_IN) April 1, 2020

Talking about the GDP, he said after the three quarters’ growth rates of 5.6, 5.1 and 4.7 per cent respectively, the fourth quarter of 2019-20 ended Tuesday. “Q4 growth could not have been more than 4 per cent. So annual GDP for 2019-20 must be a disappointing 4.8 per cent,” he said.

After the three quarters’ growth rates of 5.6, 5.1 and 4.7 per cent, the fourth quarter of 2019-20 ended yesterday.

Q4 growth could not have been more than 4 per cent. So annual GDP for 2019-20 must be a disappointing 4.8 per cent.

— P. Chidambaram (@PChidambaram_IN) April 1, 2020

He, however, said, this was the time of discussing growth rate of coronavirus and not GDP. “Once Corona in control automatically GDP will increase,” he said on the social networking website.

“In my view, we should not worry about growth now. The focus should be on saving people’s lives whatever it takes,” he said.

While reducing the interest rate on PPF and small savings may be technically correct, it is absolutely the wrong time to do so.

— P. Chidambaram (@PChidambaram_IN) April 1, 2020

Chidambaram also expressed concern over the government not announcing the second financial assistance package during the lockdown imposed amid the COVID-19 pandemic.

“That is why I am appalled that the government has not yet announced FAP II after the miserly and disastrous FAP of 25th March,” he tweeted.

The Finance Ministry reduced the interest rate on public provident fund (PPF) scheme to 7.1 per cent for the upcoming June quarter of financial year 2020-21, lowest since 1977.  Earlier, the government was offering 7.9 per cent interest on PPF. Interest on other small savings schemes too have been reduced varying from  0.7 -14 per cent. The new interest rates will come into effect from April 1, 2020 to June 30, 2020.

The Finance Ministry said in a statement on Tuesday, “In exercise of the powers conferred by Rule 9(1) of the Government Saving Promotion General Rules, 2018, the rates of interest on various Small Savings Schemes for the first quarter of financial year 2020-21 starting from April 1, 2020 and ending on June 30, 2020 have been revised.”