Kuttan Josef
The Modi Government has made a whopping Rs 27,106 crore windfall in taxes from senior citizens in FY24 as their deposits doubled in terms of account numbers and the money parked in those accounts soared to Rs 34 trillion.
The share of senior citizens’ term deposits doubled to 30 per cent in FY24 from 15 per cent in FY19 when they stood at Rs 14 trillion, according to the numbers collated by Soumyakanti Ghosh, Chief Economic Advisor at State Bank of India.
This means that in just five years, the growth has been 81 per cent in the number of accounts and 143 per cent in terms of amount. The average balance in these accounts has grown by 38.7 per cent to Rs 4.6 trillion from earlier Rs 3.3 trillion in FY19.
“Of these 74 million or so accounts, almost 73 million accounts should be in the size bracket of up to Rs 15 lakh. By assuming the interest on a senior citizen’s bank deposits being an average of 7.5 per cent, the interest earned is Rs 2.7 trillion during the year. And assuming 10 per cent average tax paid by senior citizens, the tax mop-up by the government is around Rs 27,106 crore,” says Ghosh.
The government has raised the threshold of TDS (tax deducted at source) on deposits by senior citizens to Rs 50,000, which has worked as an additional fillip for deposit mobilisation from them. That apart, banks starved of funds, have been chasing deposits with higher prices.
System-wide bank credit growth jumped 20.2 per cent in FY24 adding Rs 27.6 trillion taking the total to Rs 166 trillion. Credit growth was only 15 per cent in FY23 and 8.6 per cent in FY22, according to the analysis. On the other hand, deposit accretion picked up in the later part of the fiscal clipping at 13.5 per cent or net adding Rs 24.3 trillion taking the total to Rs 210 trillion, better than 9.6 per cent in FY23 and 8.9 per cent in FY22.
As credit growth far outpaces deposit growth, banks have been on an aggressive pitch to woo deposits and have raised deposits rates in the second half the year, even though the Reserve Bank has been holding the rate since February 2023 at 6.5 per cent.