If government of India agrees to Gopinath panel formula for associating small savings interest rates with bond yields, then be ready to get a dent of 1 percent on investments made in Public Provident Fund (PPF) and other small savings schemes.
According to panel, the interest rates of small savings schemes are higher than the average bond yield, so for PPF if the interest rate is 25 basis point higher than the average 10-year bond yield. The 10-year bond yield has dropped to 6.5% and has stayed decidedly below the 7% mark throughout the past three months. In other words, the PPF rate could fall to almost 7% in the January-March quarter.
The Gopinath panel formulas has been awaiting approval for quite long. So there are chances that government might take up the recommendation after making minor changes.