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The embrace of risk

The embrace of risk
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First Published: Sat, Mar 31 2007. 01 07 AM IST
Updated: Fri, Jan 11 2008. 11 32 AM IST
The amount of money that the government will raise in 2006-07 from various small savings schemes is likely to be Rs22,000 crore less than the target, Mint had reported on Friday. This is good news.
A high rate of interest on these savings has skewed the portfolio choices of households. Too much money has flowed into guaranteed-return schemes such as postal deposits and the public provident fund. These have been huge subsidies for middle-class households who have, as a result, desisted from buying risk capital, especially equities.
The boom in the stock market and stagnant returns on small savings have jointly led to what looks like a significant shift in the savings portfolios and risk appetites of ordinary Indians.
Higher demand for a range of financial products is an opportunity that banks and mutual funds should grab. Investors too will benefit from higher returns.
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First Published: Sat, Mar 31 2007. 01 07 AM IST
More Topics: Risk | Stock market | Small savings | Return | Views |