It’s nearly been four years since PPF interest rates were last changed in April 2020. Since then, in every quarterly revision, the government has kept the PPF rates unchanged. Since the April-June quarter of 2020, PPF rates have remained the same at 7.1% p.a. after being cut from 7.9% p.a. in the April 2020 quarter.
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But with the new year 2024 about to begin, can PPF investors expect interest rates to finally go up? While that remains to be seen, we can have a fair idea about what to expect from this tax-saving cum investment avenue, as some experts have predicted how PPF rates may behave in 2024.
But first, let us look at what PPF rates have been in the last five years.
PPF Interest Rates In Last 5 Years
Experts Predict PPF Interest Rates For 2024
What about the interest rate of PPF in 2024? Will they go up, down, or remain unchanged? Answering this, some financial experts have given their opinion, as per the ET report.
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“In Favour Of PPF Rate Getting Reset To A Higher One”
Nirav R. Karkera, Head of Research, Fisdom, says: “Rates were held in the last quarters despite a formula-driven case for an increase citing an effective adjustment against tax benefits. At the same time, yields on government securities have increased meaningfully since the last rate reset for PPF investments. Also, rates for other small savings instruments have been aligned with their respective formula-driven expectations.
Meanwhile, interest rates on PPF investments have not been able to keep pace either with the rate environment, peer instruments, or expectations based on the formula. Considering most other perspectives are constant, the case tilts in favour of a rate reset to a higher rate. Such an outlook would be highly sensitive to any surprises on the policy rate front.”
“Chances Of PPF Rate Hike Are Very Thin”
However, the chances of a PPF rate hike during the January–March quarter are very thin. Abhishek Kumar, a SEBI-registered financial adviser and founder of SahajMoney.com, says, “Although the PPF rate has not been revised since April 2020 and is currently at 7.1%, looking at the 10-year G-Sec yield for the last three months, which after rising in October is trending lower in recent months, it’s highly unlikely that the Finance Ministry is going to revise it for the January-March quarter.
“Still considering the election next year, the Central Govt might throw in a surprise for small savers and raise the PPF interest rates by 25 basis points,” Kumar said.
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“PPF Rate Hike Doesn’t Look Possible”
On the other hand, Ajinkya Kulkarni, Co-Founder and CEO of Wint Wealth, says, “PPF tracks the benchmark ten-year G-Sec yield in the secondary market for the last quarter. During the October–December 2023 quarter, this yield has stayed around 6.9%–7.3%. Since there is no significant change in the benchmark rate, any hike in the interest rate for small savings schemes doesn’t look possible.” He adds, “However, considering the upcoming central elections, there is a small possibility that the government may increase rates for small savings schemes.”
