KARACHI, Jan 4: Shaukat Aziz, adviser to the PM on finance & economic affairs said that early next week (Monday or Tuesday) he would announce a new product under the National Savings Schemes (NSS) that would offer a higher return exclusively to pensioners, widows and orphans.

The announcement was made by the Advisor at the ‘press briefing’ held on Saturday at the Karachi Stock Exchange, arranged by the bourse’s MD to mark the milestone of “Best performing stock markets in the world”.

In response to some criticism over the declining rates of return on certificates under the various schemes of NSS, Shaukat Aziz stated that the downward revision made on January 1, 2003 would only affect certificates purchased on or after January 1, 2003, while certificates under the NSS purchased prior to that date would continue to receive profits at rates prevailing on the respective dates of purchases.

The government reviews the rate of return on various instruments under the NSS, bi-annually. The adviser argued that in spite of downward revisions, the real rate of returns on the NSS were higher because of low inflation. “When we talk about 18 per cent return on some class of NSS certificates in late eighties, we must also remember that inflation then was 16 per cent,” Shaukat Aziz pointed out, adding that the latest data showed that the government had been able to pull down the rate of inflation to just about 3.6 per cent.

Shaukat Aziz said interest rate policy was an important instrument of macroeconomic management. He said that besides the fact that the returns on NSS had now been linked to the profit on PIBs, argument on distributing higher rates on NSS would be inappropriate for it would mean that more money would have to come out of the budget, which in turn would mean higher debts. “Rationalisation of rates of return on NSS is also part of Government’s debt reduction strategy,” he said.

A leading stock broker, Aqeel Karim Dhedhi (AKD) rose to urge the adviser that the government take an urgent note of misuse of NSS schemes by big players. He contended that at least 65 per cent of the money invested in NSS came from big players.