Interest rates on small savings schemes may increase by 0.5 to 0.75 per cent from next month. The government will take a decision on this by the end of this month.

With this, more investors can come in these schemes and there will be less need for the government to take additional borrowing to pay higher interest.

Aditi Nair, chief economist of rating agency Icra, said that a decision can be taken to increase the interest rates of these schemes in the second quarter of the current financial year. This is because the interest rates of government securities have gone up.

ICICI Bank Chief Economist Sameer Narang says that the borrowings that the government takes from the market are at more than 7 percent interest. In such a situation, he will have to pay more interest on small savings schemes. Among small savings schemes, the highest interest is available on Sukanya Samriddhi Yojana, which is 7.6 percent.

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