Union Cabinet approves the exclusion of States from National Small Savings Fund (NSSF)

TNPSC Current Affairs January 20 2017

The union Cabinet has given approval to exclude state government and union territories (with  legislature) from national small saving fund (NSSF) investment except Arunachal  Pradesh, Kerala, Madhya Pradesh and Delhi effect from April 1 2017

It also approved providing Rs 45000 cr from NSSF to Food corporation of India to meet its food subsidy requirement as one-time Loan.

The exclusion of State government and Union territories from the investment operations of the NSSF is recommended in the 14th finance commission.

The NSSF loans are more comparing to the market rates.
However Arunachal Pradesh is eligible to get the loans amounting 100 5 of NSSF collected withing its territory and Delhi, Kerala and Madhya Pradesh will get 50 % of its collections.
The Exclusion of State from NSSF the availability of the funds of NSSF with government  will increase, which reduce the Government borrowing FROM MARKET.
About NSSF: 

The NSSF in the public account of India came into effect on April 1 1999. The new sub sector has been introduced in major and minor heads of Government accounts. All the small savings are credited to this new sub sector NSSF and the withdrawals under small saving scheme by the depositors are given from the accumulation in this funds. Remaining fund will be invested in government securities as per Government of India norms.
These funds are administered by ministry of finance under NSSF Rules, 2001, framed by the President under Article 283(1) of the Constitution

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