When it comes to investment, there is one big fear in everyone’s mind, and that is the fear of losing hard-earned money. Though the market gives good rewards for the risks taken, there is also the possibility of loss in some cases. Not everyone has the appetite for taking risks. Many people choose options that are quite safe, even though the return is not as high. For those who do not want to take risks, the government of India has come up with low-risk investments that offer steady returns as well. Read the following article to know the different best government investment schemes in India.
Best Government Investment Schemes
Following are some of the best government investment schemes for Indians in terms of risk, interest rates, lock-in period and investment flexibility:
| Gov. Investment Scheme | Interest rate % | Lock-in Period | Min Investment amount | Max Investment amount |
| National Savings Certificate (NSC) | 7.7 | 5 years | 1,000 | No limit |
| Public Provident Fund (PPF) | 7.1 | 15 years | 500 | 1.5 lakh/annum |
| Sukanya Samridhi Yojana (SSY) | 8.2 | Until the child turns 21 | 250 | 1.5 lakh |
| National Pension Scheme (NPS) | Market oriented | Till retirement | 6k | No limit |
| Senior Citizens Savings Scheme (SCSS) | 8.2 | 5 years | 1,000 | Up to 30 lakh |
| Kishan Vikash Patra (KVP) | 7.5 | 30 months | 1,000 | No limit |
| Post-office Time Deposit Account | 6.8 – 7.5 | 1 – 5 years | 1,000 | No limit |
| Post-office Monthly Income Scheme (POMIS) | 7.4 | 5 years | 1,000 | Up to 9 lakh |
National Savings Certificate (NSC)
National Savings Certificate is a good investment option by the government of India for small and middle-class investors. Investment in NSC can be done either through a post office or an authorized bank in India. The minimum investment amount is Rs 1,000 and there is no maximum limit of investment amount.
Since NSC is a fixed-income scheme, it offers an annual interest rate of 7.7 percent, which is compounded annually. However, the interest rate is revised on a quarterly basis by the Ministry of Finance, India. Like other compounding scheme, here also the interest amount is reinvested into the account every year for a total of 4 years. The only limitation with NSC is that you cannot withdraw the principal as well as the interest amount before 5 years is completed. Besides, investment in NSC is under tax deduction under Section 80C of the IT Act, 1961.
Public Provident Fund (PPF)
Public Provident Fund (PPF) is a long-term investment plan which was first introduced in India in 1968. It is one of the best investment plans for long-term goals such as retirement. This is an investment plan that offers guaranteed interest to investors. Anyone can open a PPF account from an authorized Indian bank with a minimum of 500 rupees investment per annum. However, the maximum investment amount could be 1.5 lakh per year. Once in a year investment is necessary and if failed, the account will be inactive.
The interest rate on PPF is revised quarterly by the Ministry of Finance. For this quarter, the interest rate is 7.1 percent. Since it is a long-term investment plan, it allows to withdraw your invested money partially from the 7th year. Besides, you can also get a loan against PPF (maximum 25 percent of the invested amount).
Sukanya Samridhi Yojana (SSY)
Sukanya Samridhi Yojana (SSY) is one of the best government investment schemes which was launched by the Honorable Prime Minister Narendra Modi on January 22, 2015 in Panipat, Haryana. The SSY under the “Beti Bachao Beti Padhao” campaign focusses on Girl Child Prosperity in terms of girls education and financial independence. Parents can start investing a minimum of 250 rupees to 1.5 lakh rupees per annum. The investment should be done until the girl child attains 15 years of age. The current yearly interest rate is 8.2%. Parents can open SSY account at any authorized bank or post-office provide the girl child age is below 10 years. Besides, a maximum of two SSY account is allowed per family. The matured investment with interest can be withdrawn only after the girl child attains 21 years of age.
National Pension Scheme (NPS)
National Pension Scheme (NPS) as the name suggests is a retirement scheme which was initiated by the Central Government. This scheme is open for employees from different sectors including public, private and unorganized sectors except armed forces. The National Pension Scheme is regulated by the PFRDA (Pension Fund Regulatory and Development Authority).
Under this scheme, people are encouraged to invest a portion of their earnings in a pension account on a regular basis until they retire. After their retirement, they can get regular pension for lifetime. The minimum investment amount for NPS is 6,000 rupees, and there is no maximum limit. The investment in NPS offers tax deduction under 80C and 80CCD.
Senior Citizens Savings Scheme (SCSS)
Senior Citizens Savings Scheme (SCSS) as the name suggests is one of the government investment schemes where senior citizens get regular interests on their investment. The main objective of this investment scheme is to provide regular source of income to senior citizens. Getting this scheme is easy – senior citizens would need to invest a lumpsum amount and get regular payments. SCSS account can be opened in any authorized banks or post-office with a minimum investment of 1,000 and a maximum of 30 lakhs.
Under this scheme, the government is currently paying 8.2 percent interest rate per annum. The interest is paid quarterly. Though the maturity period of this scheme is 5 years, but it can be further extended for another 3 years. Withdrawing money prematurely within one year of account opening has no penalty, but there is penalty if withdrawn after one year. Investment in SCSS falls under the category of tax deduction under Section 80C of the IT Tax Act, 1961.
Kishan Vikash Patra (KVP)
Kishan Vikash Patra (KVP) is one of the oldest government savings schemes, also called as post office savings scheme that was introduced first in 1988. This scheme was primarily opened for farmers, but it is now open for all the citizens of India. This government scheme allows you to start investing from 1,000 rupees to 50,000 rupees or more for a long-period of 10 years. There is no upper limit of investment under this scheme. The KVP scheme offers 7.5 percent interests on investment amount, which is compounded annually. There is a locking period of 30 months after which invested money can be withdraw for emergency purposes. The KVP scheme falls under the category of tax deduction.
Post-office Time Deposit Account
Post-office Time Deposit Account is just like Fixed Deposits (FDs) where one can invest money for a certain period of time, say, one, two, three, or five years. The minimum investment amount required to open post-office time deposit account is 1,000 rupees, but there is no maximum limit for the same. The interest rate varies from 6.8 to 7.5 percent. Just like FDs, the invested amount remains locked for the tenure of the investment one chooses. However, one can withdraw the amount after 6 months and before one year without any penalty. And if the invested money is withdrawn after a year or so then there is a penalty of one percent.
Post-office Monthly Income Scheme (POMIS)
Post-office monthly income scheme (POMIS) is a government scheme being offered by the post office where a fixed interest rate is given on a monthly basis on the invested amount. Under this scheme, the post office offers 7.4 percent interests annually, and paid monthly for a period of 5 years. The minimum investment can be done with just 1,000 rupees and the maximum investment could go up to 9 lakh. Investors can either withdraw the interest on a monthly basis or reinvest to enjoy more interests on the invested amount. The POMIS falls under the category of tax deduction.
FAQs (Frequently Asked Questions)
Q. Which government investment schemes have the highest interest rates?
A. There are two government schemes i.e., Sukanya Samriddhi Yojana and Senior Citizen Savings Schemes where the interest rate is 8.2% per annum.
Q. Which is the safest way to invest in India?
A. All government sponsored investment schemes are considered safe in India.
Q. Which Post-office government investment schemes or scheme will double money?
A. Kishan Vikash Patra (KVP) is a Post-office savings scheme where you can double your money in 9 years and 7 months.