Savings by lottery

Published March 13, 2017

THE new premium prize bonds are a creative idea, and the fact that they will be registered means they will be less likely to be used for money laundering and cash hoarding. As such, they could be an interesting experiment. If interest in the prize bonds is low, we will be able to conclude that much of it comes from the holders of black money. But if demand for the new bonds is high, it will be grounds to perhaps phase out the unregistered bonds altogether and replace them with the premium bonds so as to close off one more avenue for the whitening of black money. The bonds will be useful towards this end, but if the government wants us to understand that these are instruments for documenting the economy, or getting the savings rate up, it should be prepared for some scepticism.

Getting the savings rate up to 30pc is a laudable aim, but it will take more than a glorified lottery scheme to realise this goal. As it stands, the bonds seek to get people’s attention by offering a ‘profit’, which we are supposed to believe is not the same as ‘interest’, as well as the chance of winning Rs80m as the first prize. But their requirement is that the ‘profit’ as well as the prize money will be paid into a bank account. It is not clear whether or not they will be transferable. If yes, then their documentation impact is likely to be limited, and if not then interest in the bond could be low. In any case, they will certainly play some role in mobilising white money towards savings, but the big challenge of raising the savings rate can only be met by offering large avenues, such as bank deposits or national savings schemes. At its best, the premium bond will be little more than a gimmick towards such a lofty goal, the pursuit of which will require far greater effort.

Published in Dawn, March 13th, 2017

Opinion

Editorial

‘Source of terror’
29 Mar, 2024

‘Source of terror’

ALTHOUGH dealing with the presence of terrorist groups in Afghanistan is a major political, security and strategic...
Chipping in
29 Mar, 2024

Chipping in

FEDERAL infrastructure development schemes are located in the provinces. Most such projects — for instance,...
Toxic emitters
29 Mar, 2024

Toxic emitters

IT is concerning to note that dozens of industries have been violating environmental laws in and around Islamabad....
Judiciary’s SOS
Updated 28 Mar, 2024

Judiciary’s SOS

The ball is now in CJP Isa’s court, and he will feel pressure to take action.
Data protection
28 Mar, 2024

Data protection

WHAT do we want? Data protection laws. When do we want them? Immediately. Without delay, if we are to prevent ...
Selling humans
28 Mar, 2024

Selling humans

HUMAN traders feed off economic distress; they peddle promises of a better life to the impoverished who, mired in...