IndiaSphere

The last time inflation crossed 11 per cent in India, you could have bought a kilo of potatoes for Rs 4 in Calcutta and earned a handsome 13 per cent interest, along with a 10 per cent maturity bonus, on the post office monthly savings account.Thirteen years on, the price of potato has doubled to Rs 8 and the maturity bonus on the popular small savings scheme has halved to 5 per cent. The annual interest on the scheme also has come down to 8 per cent from 13 per cent.In other words, you have lost money if you kept your savings in the post office where the real rate of interest (the nominal interest rate minus the rate of inflation) has turned negative by 3.05 per cent. All small savings schemes, including the Public Provident Fund, gave 12 per cent interest in 1995 compared with 8 per cent now. ... [Follow Original Article link for full content.]