Turned 25? Make a One-Time Investment of ₹5 Lakh and Get ₹5.8 Crore! Check How?

In India, turning 25 is more than just another birthday — it’s a turning point.  While career progression and lifestyle goals take centre stage, there’s one critical aspect that often gets sidelined — building a strong financial foundation. At 25, you’re at a sweet spot: you’ve likely started earning, and time is still on your side. This makes it the perfect age to make a strategic one-time investment that can snowball into a substantial corpus by the time you retire.

Starting Early: The Power of Compounding

When it comes to building wealth, time is the most powerful asset. The earlier you start investing, the more time your money has to grow through the power of compounding. Compounding essentially means earning returns not only on your initial investment but also on the returns that accumulate over time. The longer your money stays invested, the more it grows.

Starting with a lump sum investment and allowing it to grow at an average rate of return can result in a massive increase in value over the years. Even small investments, if made early, can turn into significant sums by the time you retire.

A Simple Example: ₹5 Lakh Investment at 25th Birthday

Imagine making a one-time investment of ₹5 lakh on your 25th birthday and leaving it to grow at an average rate of return of 12% annualised. At first glance, ₹5 lakh may seem like a modest amount, but the results can be truly astonishing over the long term.

Let’s break it down:

  • Investment Amount: ₹5,00,000 (₹5 Lakhs)
  • Expected Rate of Return: 12% annualised
  • Investment Period: 35 years (from age 25 to retirement at 60)

If you leave this investment untouched and allow it to compound over 35 years, the final value of the investment would be ₹2,63,99,809.79  (2.64 Crores)

  • Total Earnings: ₹2,58,99,809.79  (2.59 Crores)
  • Total Deposited Amount: ₹5,00,000 (5 Lakhs)

The Power of Starting Early

The key takeaway from this example is that the earlier you begin, the greater the potential for your money to grow. By investing at a young age, you give your wealth plenty of time to grow, which results in a significantly larger corpus at the time of retirement.

The most important aspect here is the rate of return. A steady return of 12% annually, which can be expected from a mix of equity-based investments, mutual funds, and other growth assets, can make a big difference. By investing in a balanced portfolio and allowing it to grow, you can set yourself up for a financially secure future.

Conclusion: A Step Towards a Wealthy Retirement

By making smart decisions, such as investing early, you could secure a substantial corpus for your retirement. Even a one-time investment of ₹5 lakh, when given enough time and compounding, can turn into a wealth-building tool that could significantly improve your quality of life post-retirement.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

How RBI’s ₹15.5 Lakh Crore Liquidity Infusion is Keeping the Banking System Afloat

In recent months, the Reserve Bank of India (RBI) has taken significant steps to infuse liquidity into the banking system, addressing the growing concern over a funds crunch and supporting credit growth. According to the RBI’s latest monthly bulletin, the central bank injected approximately ₹15.5 lakh crore into the system over the past two months. This move is part of an ongoing strategy to manage liquidity fluctuations and ensure the smooth functioning of the financial markets.

Sources of Liquidity Tightness

Liquidity tightness has been a persistent issue in the Indian banking system. Several factors have contributed to this situation:

  • Foreign Exchange Market Interventions: To curb excessive volatility in the rupee, the RBI intervenes in the foreign exchange market, buying and selling dollars. This process drains rupee liquidity from the banking system.

  • Government Tax Flow Dynamics: The government’s tax inflows and outflows also influence liquidity, with periods of high tax payments leading to short-term liquidity strain.

  • Currency Leakages and FPI Outflows: Another contributing factor has been the outflow of foreign portfolio investment (FPI) funds, which further exacerbates liquidity constraints.

Measures Taken by the RBI

To tackle the liquidity challenges, the RBI has implemented a series of measures, both durable and transient in nature. In the fourth quarter of FY25, the RBI injected ₹5.5 lakh crore of durable liquidity into the banking system. This was achieved through the following mechanisms:

  • Open Market Operations (OMO): The RBI conducted purchases of Government Securities (G-Secs) from banks to infuse long-term liquidity into the system.

  • Variable Repo Rate (VRR) Auctions: The RBI has been conducting VRR auctions, allowing banks to place G-Secs as collateral and draw short-term liquidity.

  • Forex Swaps: The RBI also engaged in US Dollar/Indian Rupee buy/sell swaps, where banks sell dollars to the RBI, which then returns rupee funds with the swap premium after the agreed period.

Daily VRR Auctions and Their Impact

Since January 16, the RBI has been conducting daily VRR auctions to mitigate the transient liquidity tightness. These auctions have been pivotal in maintaining liquidity within the banking system. The RBI’s efforts included 2 main VRR operations and 22 fine-tuning operations, injecting a total of ₹9.68 lakh crore into the system between February 16 and March 17, 2025.

These VRR auctions, with maturities ranging from 1 to 8 days, have been crucial in addressing short-term liquidity challenges, ensuring that banks have access to sufficient funds to meet their immediate requirements.

Deficit and Surplus Liquidity Conditions

Despite the RBI’s efforts, liquidity deficit conditions persisted, particularly in the latter half of February and early March 2025. The seasonal uptick in currency in circulation (CiC) exacerbated the deficit during this period. However, the RBI’s intervention through various measures helped reduce the severity of the deficit.

  • The average daily net injection under the Liquidity Adjustment Facility (LAF) stood at ₹1.41 lakh crore from February 16 to March 13, compared to ₹1.92 lakh crore during the previous month.

  • The liquidity deficit reached a peak of ₹3.15 lakh crore on January 23, but by March 18, it had moderated to ₹2.26 lakh crore.

Standing Deposit Facility (SDF)

In addition to the liquidity interventions, the RBI has observed increased placements of funds by banks under the Standing Deposit Facility (SDF). Between February 16 and March 13, the average placement stood at ₹1.15 lakh crore, higher than ₹0.85 lakh crore in the previous month. This indicates a higher level of surplus funds within the banking system, which banks are depositing with the RBI rather than deploying in the market.

Conclusion

The RBI’s liquidity interventions have played a crucial role in stabilising the banking system amidst the challenges posed by liquidity tightness. While the liquidity deficit persists, the central bank’s ongoing efforts to manage it are proving to be effective in maintaining stability within the financial markets. The combination of durable and transient measures, including OMO purchases, VRR auctions, and forex swaps, has helped ensure that banks continue to function smoothly and that credit growth remains supported in these uncertain times.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks; read all the related documents carefully before investing.

RBI Prohibits Excessive Charges on Loans Up to ₹50,000 Under Priority Sector Lending

The Reserve Bank of India (RBI) has introduced significant changes to the Priority Sector Lending (PSL) framework, aiming to ensure more equitable lending practices. These new guidelines, effective from April 1, 2025, provide additional safeguards for small borrowers, specifically protecting those taking loans of up to ₹50,000 under the PSL category.

Protection for Smaller Loan Amounts

One of the major changes outlined by the RBI is the prohibition of excessive charges, particularly for smaller loans within the PSL. In its directive, the RBI has clearly stated that no loan-related or ad hoc service charges, including inspection charges, will apply to loans up to ₹50,000. This policy change aims to shield small borrowers from unnecessary financial burdens, promoting fair and transparent lending practices by banks.

The move is seen as a significant step in reducing the financial strain on individuals who may already be vulnerable and ensuring that financial services remain accessible to those who need them most.

Clarification on Loans Against Gold Jewellery

In the updated guidelines, the RBI has also clarified that loans taken against gold jewellery acquired by banks from Non-Banking Financial Companies (NBFCs) will no longer qualify under the PSL category. This means that banks cannot classify these gold-backed loans as part of their PSL targets, reinforcing the central bank’s focus on directing funds to genuinely underserved sectors like agriculture, small businesses, and weaker sections of society.

Continuity for Existing PSL Loans

To maintain stability for existing borrowers and ensure a smooth transition, the RBI has confirmed that all loans falling under the earlier PSL guidelines (2020 framework) will continue to be considered as priority sector loans until their maturity. This provision ensures that borrowers will not be disadvantaged by the changes and can continue to benefit from the PSL status of their loans.

Enhanced Monitoring and Transparency

The new guidelines also place a stronger emphasis on monitoring and transparency. Banks will be required to submit detailed data on their priority sector advances on a quarterly and annual basis. The RBI mandates that these reports must be submitted within 15 days after the end of each quarter and within one month after the close of the financial year. This enhanced reporting is aimed at improving accountability and ensuring that PSL targets are met more effectively.

Consequences of Failing to Meet PSL Targets

For banks that fail to meet their prescribed PSL targets, the RBI has introduced a financial remedy. Such banks will be required to contribute to the Rural Infrastructure Development Fund (RIDF) and other schemes managed by institutions like NABARD. This policy ensures that even if banks fall short of their lending obligations, they are still contributing to the development of the priority sectors.

Support for COVID-19 Relief Loans

The RBI has also affirmed that loans extended under specific COVID-19 relief measures will continue to be classified as priority sector lending. This decision aims to assist sectors that are still recovering from the pandemic’s economic impact, ensuring that they have continued access to financial support.

Conclusion: Strengthening Financial Inclusion

With the implementation of these updated PSL guidelines, the RBI aims to foster financial inclusion and promote socio-economic growth. By ensuring that credit reaches underserved sectors, such as small businesses, agriculture, and weaker sections of society, the RBI is working towards building a more inclusive and equitable financial system. The new framework underscores the central bank’s commitment to ensuring fair lending practices while directing essential credit where it is needed the most. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Loan Against LIC Policy: Check Interest Rates, Eligibility and More

Here’s a detailed look at the scenario and key aspects of a loan against LIC policy, including eligibility, loan amount, interest rates, repayment tenure, and how you can apply.

Loan Against LIC Policy with a Yearly Premium of ₹50,000 and 15-Year Policy Duration

Consider the following:

Policyholder: Rahul Sharma
Policy: LIC Endowment Policy
Premium: ₹50,000 per year
Policy Duration: 15 years
Surrender Value of Policy (after 15 years): ₹7,50,000

Rahul Sharma has been paying an annual premium of ₹50,000 for his LIC Endowment Policy for the past 15 years. After this time, his policy has accumulated a surrender value of ₹7,50,000.

How Much Loan Amount Can Rahul Borrow?

The amount you can borrow depends on the surrender value of your LIC policy. The loan amount is decided on various factors, such as the policy’s duration, accumulated bonuses, and the surrender value at the time of the loan application.

LIC generally offers up to 90% of the surrender value for active policies. However, if your policy has been paid up (i.e., premium payments have stopped), you can borrow up to 85% of its surrender value.

With Rahul’s policy being active for 15 years, he can borrow based on the surrender value:

  • Maximum Loan Against Active Policy: 90% of surrender value 
  • Loan Amount:
     90% of ₹7,50,000 = ₹6,75,000
     So, Rahul can borrow a maximum of ₹6,75,000 against his LIC policy.

If Rahul’s policy had been paid up, he could have borrowed 85% of the surrender value, which would have been ₹6,37,500. However, since the policy is still active, he is eligible for the higher loan amount of ₹6,75,000.

Loan Against LIC Policy: Repayment Terms

LIC does not have a fixed EMI schedule for loan repayment. The repayment terms are more flexible, and you can either make a lump sum repayment before the policy’s maturity or choose to pay in regular instalments to reduce both the principal and interest over time.

What are the Eligibility Criteria for a Loan Against LIC Policy?

  • Surrender Value: Only policies with a surrender value (e.g., endowment, whole life, money-back) are eligible. Term plans and ULIPs are not. 
  • Active Policy: All premiums must be paid. Lapsed policies must be revived before applying. 
  • Policy Tenure: Must be in force for at least 3 years. 
  • Applicant: Only the policyholder can apply, not the nominee or beneficiary. 
  • Minimum Age: Applicant should be 18 years or older.

Interest Rate for Loans Secured Against LIC Policies

The interest rate for a loan secured against a Life Insurance Corporation (LIC) policy typically falls between 9% and 11%. This is generally lower than the rates offered on standard personal loans, as the risk to the lender is reduced—thanks to the loan being backed by the policy’s surrender value. It is advisable to confirm the latest applicable rate directly with LIC or your financial institution, as rates may vary depending on current terms and conditions.

Things to Keep in Mind

  • Your LIC insurance policy acts as collateral in the loan against an LIC policy
  • The Life Insurance Corporation of India allows policyholders to avail loans against specific insurance plans, such as endowment plans, whole-life plans, money-back plans, and pension plans
  • If you default on the loan, LIC can recover the amount from the policy’s maturity or death benefit

Conclusion

A loan against your LIC policy is a simple and hassle-free way to obtain quick financial assistance while keeping your policy intact. The eligibility criteria are clear, and the loan process is straightforward, whether you choose to apply online or offline. Additionally, the repayment options offer flexibility, making it a convenient option for many policyholders.

 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

5.6 Lakh People Above 100 Years Identified in Food Security Scheme

The Government of India has recently highlighted some fascinating findings from its verification process of beneficiaries under the national food security scheme. According to a data, presented in the Rajya Sabha by the Food and Consumer Affairs Minister, Pralhad Joshi, approximately 5.6 lakh individuals over 100 years old have been identified as beneficiaries of the scheme. This data was uncovered through an extensive e-KYC verification process, which aims to ensure that only eligible individuals receive government aid.

An Overview of the Food Security Scheme

The food security programme, which includes several sub-schemes, plays a vital role in providing subsidised food to the underprivileged sections of society. Notably, the Antyodaya Anna Yojana (AAY) provides 35 kg of free food grains per month to the poorest families. For families with a single member, 35 kg of grains is allotted monthly, while other families may receive different amounts based on their eligibility.

Additionally, the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) ensures that each registered beneficiary receives 5 kg of free food grains per month. While the programme targets low-income individuals, discrepancies in the beneficiary lists have surfaced during the verification process.

Key Findings from the e-KYC Verification

According to a news report, the verification process, which employed the use of Aadhaar data, revealed some significant findings. A notable discovery was the identification of nearly 34 lakh PMGKAY beneficiaries who were no longer alive. This indicates the need for continued vigilance and regular updates to the list of beneficiaries to avoid errors in allocation.

As per report, another important revelation was that about 45 lakh AAY ration cards had been issued to families consisting of only 2 members. Furthermore, a staggering 33.2 lakh duplicate beneficiaries were identified, underscoring the importance of thorough scrutiny. Around 2.2 crore beneficiaries were also found to be in the ‘silent ration card’ category, which means they had not availed of their ration for periods ranging from three to twelve months.

Progress of the e-KYC Process

As of the latest update, the government has completed the e-KYC verification for 74% of the total 80 crore beneficiaries. This verification is crucial to ensuring that only eligible individuals receive food grains under these schemes. Minister Pralhad Joshi emphasised that the government is committed to cleaning up the beneficiary lists to ensure that deserving families are not deprived of their entitled food resources.

Addressing the Issues of Incorrect Allocations

During the verification process, it was revealed that over 2.1 lakh ration cards had been issued to families with a single member below 18 years of age. The government is also tackling the problem of duplicate beneficiaries, where multiple individuals were found to be registered under the same family or category. Minister Joshi assured that the details of ineligible beneficiaries had been shared with state governments, allowing them to correct the records by removing the duplicates and adding deserving candidates.

State Government’s Role in the Process

It is essential to note that state governments are responsible for issuing ration cards, and they have the flexibility to set their criteria within the prescribed ceiling limits. As of now, nearly 81.4 crore people are eligible for free food grains, with about 80.6 crore already enrolled in the system. The government is aiming to add 80 lakh more beneficiaries, ensuring that those who genuinely require food security are included in the system.

The Broader Picture of Poverty Alleviation

In his address, Minister Joshi also cited World Bank data, which states that between 13 crore and 25 crore people have moved out of multi-dimensional poverty over the past nine years. This data suggests that the food security schemes, along with other poverty alleviation efforts, are contributing to significant improvements in living conditions for many Indians.

Conclusion: A Step Towards Accuracy and Inclusion

The ongoing e-KYC exercise is not just about cleaning up the list of beneficiaries but also about ensuring that food grains reach those who need them the most. While the process has unearthed several discrepancies, the government’s commitment to improving the allocation system is a crucial step in the right direction. With regular updates, a more transparent and efficient food security system will be established, benefiting those who truly require support.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

India’s Lab-Grown Diamond Startups Strive for Market Growth

More Indians are choosing lab-grown diamonds, pushing homegrown startups to expand quickly and tap into the growing demand for affordable, sustainable jewellery, as per the latest reports. The domestic market, while still in its early stages, has seen an increase in the number of startups attempting to build a national presence. 

According to market reports, India currently has 37 lab-grown diamond startups, the highest number globally.

No Dominant Player Yet

Despite the presence of established jewellers in the space, no single company has emerged as a market leader. This has created opportunities for newer entrants to scale operations and build brand identity. Startups are increasing their retail footprint to meet growing demand and compete for visibility in Tier 1 cities.

Jewelbox Expands Retail Network

Kolkata-based Jewelbox operates eight stores across 6 cities, including Delhi, Chennai, and Bengaluru. The brand has announced plans to open 25 more outlets by the end of the financial year. Around 40% of its orders currently come from its online platform. The company was also featured on Shark Tank India and secured investment from judges associated with companies like boAt, Sugar Cosmetics, Lenskart, and Oyo.

Other Startups in the Sector

Other startups building a presence in this segment include Limelight, Fiona Diamonds, Wondr Diamonds, Titan Capital-backed Truecarat Diamonds, Aupulent Jewellery, and Alteria Capital-backed Aukera Jewellery. Traditional players are also entering the space. Augmont, a gold trading platform, recently invested ₹100 crore to launch its lab-grown diamond brand, Akoirah.

Pricing and Supply Chain 

Unlike natural diamonds, which are priced based on the Rapaport price list, lab-grown diamonds are priced according to production costs and retailer margins. Over the past year, prices have dropped by 25-30% due to oversupply and relatively low production costs. Margins across the supply chain have been reduced, making pricing more competitive.

Conclusion

Lab-grown diamond startups are scaling operations to meet rising demand, with no clear market leader yet. The focus remains on expanding retail presence and managing costs in a price-sensitive, fast-evolving category.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

BHEL Renews Technology Partnership with Vogt Power International for HRSGs

Bharat Heavy Electricals Limited (BHEL) has renewed its Technology Collaboration Agreement (TCA) with Vogt Power International Inc. (VPI), USA. This extension focuses on advancing Heat Recovery Steam Generators (HRSGs), reinforcing BHEL’s technological capabilities in the power sector.

Key Details of the Agreement  

  • Partner: Vogt Power International Inc., USA  
  • Area of Agreement: Heat Recovery Steam Generators  
  • Nature: International collaboration  
  • Scope: Extending the TCA for HRSGs  

Relevance and Benefits  

The extension of this agreement allows BHEL to stay updated with technological developments in HRSGs. It also helps BHEL maintain a competitive advantage, support business needs for combined cycle and cogeneration plants and contribute to the ‘Make in India’ initiative.  

About Bharat Heavy Electricals Limited

Bharat Heavy Electricals Limited is an Indian public sector company known for manufacturing power equipment. It is known for its strong technical expertise, extensive manufacturing capabilities and contributions to India’s industrial growth. Established in 1964, it plays a key role in India’s power and industrial sectors, focusing on advanced technology and supporting the ‘Make in India’ initiative.

Share performance 

As of March 26, 2025, at 1:55 PM, the shares of BHEL are trading at ₹212.36 per share, reflecting a loss of 0.58% from the previous day’s closing price. Over the past month, the stock has registered a profit of 13.29%. The stock’s 52-week high stands at ₹335.35 per share, while its low is ₹176.00 per share.

Conclusion

The extension of the agreement between BHEL and VPI marks a strategic step for BHEL to enhance its technological capabilities and remain competitive in the global market. This collaboration is expected to benefit both entities and support India’s goal of increasing domestic manufacturing strength.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Infosys Share in Focus as Incorporates Step-Down Subsidiary in the Netherlands

Infosys Limited announced the incorporation of a step-down wholly-owned subsidiary named Infosys BPM Netherlands B.V. It operates in the IT and IT-enabled Services (ITES) sector and is fully owned by Infosys BPM UK Limited.

Details of the New Subsidiary  

The subsidiary is categorised under the Information Technology and Information Technology-Enabled Services (IT and ITES) sector.  

  • Name: Infosys BPM Netherlands B.V.  
  • Country of Incorporation: Netherlands  
  • Share Capital: One Euro   

Ownership and Structure  

This new entity is a 100% step-down subsidiary of Infosys Limited, owned through Infosys BPM UK Limited. It is not an acquisition but an incorporation, so related party transactions and arm’s length considerations are not applicable. 

Background and Significance  

This incorporation aims to expand Infosys’s presence in Europe, aligning with its broader business strategy.

  • Date of Incorporation: March 20, 2025  
  • Business Registration Extract Received: March 24, 2025  
  • Operational Scope: As a newly established entity, its operational details and turnover history are not available.  

About Infosys 

Infosys, founded in 1981 and based in Bengaluru, India, is a global leader in digital services and IT consulting. Operating in over 50 countries with 317,000+ employees, it focuses on AI, cloud services and digital transformation. Known for its global impact, Infosys was the first Indian IT firm listed on NASDAQ.

Share performance 

As of March 26, 2025, at 1:40 PM, the shares of Infosys Ltd are trading at ₹1,604.65 per share, reflecting a loss of 1.46% from the previous day’s closing price. Over the past month, the stock has registered a loss of 9.05%. The stock’s 52-week high stands at ₹2,006.45 per share, while its low is ₹1,358.35 per share.

Conclusion

The incorporation of Infosys BPM Netherlands B.V. is part of Infosys’s strategy to strengthen its presence in Europe. This expansion reflects the company’s commitment to enhancing its global footprint in the IT and ITES sector.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

8th Pay Commission Timeline: When Can Government Employees Expect Changes?

The government is on the verge of finalising the establishment of the 8th Pay Commission, which will play a pivotal role in revising the salary and pension structure for central government employees. As per news reports, the terms of reference for the commission are expected to be sent for cabinet approval by early next month, and the formal notification will be issued once the cabinet clears it. The 8th Pay Commission is anticipated to commence its operations in April 2025, following a lengthy but necessary process of approvals.

Expected Timeline for the 8th Pay Commission

Once the terms of reference are finalised, the commission will begin its operations. If the approval process is completed by the end of this month, it is expected that the commission will submit its final report by March 2026. Previous pay commissions have taken more than a year to finalise their recommendations, and this process could conclude within the same time frame, although it is possible that the timeline might be shorter.

The government has already sought suggestions from various ministries, including the Ministry of Defence, Ministry of Home Affairs, and the Department of Personnel and Training (DoPT), regarding the areas the commission should focus on for recommendations. A top government official confirmed that some suggestions have already been received, while others are still awaited. The official further clarified that the commission will be notified as soon as it is approved by the Cabinet.

Financial Implications and Impact

The upcoming revisions are set to affect over 50 lakh central government employees and pensioners, including defence personnel. This will undoubtedly have a substantial financial impact on the Indian government. For instance, the implementation of the Seventh Pay Commission in 2016 led to a significant increase in government expenditure, with an estimated cost of Rs 1 lakh crore in FY17. However, the financial burden of the 8th Pay Commission will only be realised starting from FY27.

Beyond the financial aspects, the proposed pay revisions are expected to have a positive impact on economic growth. By increasing the disposable income of government employees, the revisions will likely stimulate consumption, thereby improving the quality of life for these individuals. This, in turn, is expected to have broader economic benefits for the country.

A Look Back at Past Pay Commissions

Since the independence of India, 7 pay commissions have been established, with the most recent one being implemented in 2016. Each of these commissions has played a significant role in shaping salary structures, allowances, and pension benefits for government employees. Their recommendations have had a profound impact on public finances and have consistently influenced the overall economic landscape. As a result, the 8th Pay Commission is being watched closely by government employees, pensioners, and economists alike.

Conclusion

While the specifics of the upcoming pay revisions are still being finalised, the government has ruled out merging 50% of the Dearness Allowance (DA) and Dearness Relief (DR) with basic pay and pensions, at least for now. Minister of State for Finance, Pankaj Chaudhary, clarified this in a statement made in the Rajya Sabha on March 20, indicating that such a proposal will not be considered at present.

With the Cabinet’s approval anticipated soon, all eyes will be on the 8th Pay Commission as it prepares to impact the lives of millions of government employees and pensioners across the country.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Mahila Samman Savings Scheme: Limited Time Left to Get 7.5% Interest

The Mahila Samman Savings Certificate (MSSC) is a government-backed small savings scheme designed exclusively for women and girls. Launched to promote financial inclusion and economic independence, this scheme offers a secure and rewarding investment opportunity with a fixed tenure of two years. With an attractive interest rate and flexible withdrawal provisions, it serves as a reliable savings option for women seeking financial growth.

Individuals considering investing in this small savings scheme should note the upcoming deadline. The Mahila Samman Savings Certificate scheme will close for new investments on March 31, 2025.

Eligibility and Investment Details

The MSSC scheme is open exclusively to women and girls, with the provision for guardians to invest on behalf of minors. The minimum deposit amount required is Rs 1,000, while the maximum permissible investment is Rs 2 lakh per individual. The scheme ensures steady returns by offering an annual interest rate of 7.5%, which is compounded quarterly and credited to the account. Upon maturity, the accumulated amount, including interest, is paid out in full. Additionally, account holders can withdraw up to 40% of their deposit after one year, providing financial flexibility in case of urgent requirements.

Tax Implications

While the MSSC offers high returns, it does not provide tax benefits under Section 80C of the Income Tax Act. The interest earned is classified under “Income from Other Sources” and is taxable accordingly. Investors should factor in these tax implications while comparing MSSC with other tax-saving investment alternatives.

Interest Rate Comparison with Bank Fixed Deposits

For those evaluating alternative investment options, a comparison with two-year fixed deposit (FD) rates across major banks is essential.

The State Bank of India (SBI) offers a 6.80% interest rate for general citizens, with senior citizens receiving an additional 50 basis points for terms between one year and under two years. HDFC Bank provides a 7.25% interest rate for general depositors, with a similar 50-basis-point benefit for seniors on deposits ranging from 18 months to under two years. Canara Bank offers a peak rate of 7.25% for a 444-day FD, while Axis Bank matches this rate for tenures between 15 months and two years, granting senior women an additional 0.50%.

Conclusion

The Mahila Samman Savings Certificate stands out as a structured and secure investment tailored for women. With a competitive interest rate and partial withdrawal benefits, it presents a lucrative savings option. However, potential investors should weigh tax considerations and compare available alternatives to make informed financial decisions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.