small saving schemes

The arguments for linking interest rates on small saving (SS) schemes to market rates and rationalising the tax benefits available to them rest on removing the government's arbitrary powers in a liberalised interest rate environment. If as a result of the suggested measures SS schemes become relatively unattractive, the government would need to borrow more from alternative sources. If total government borrowing is not kept in check, yields on government securities would go up and with it the interest rates on SS schemes would also warrant upward revision.