ISLAMABAD, June 14: The national savings schemes lost Rs69.3 billion through withdrawals and decline in new investment during the first nine months of 2003-04 as deposits in the schemes dropped to Rs5.7 billion as against Rs74 billion deposited during July-march 2002-03.

While reporting this negative development, the Economic Survey attributes it to "availability of better investment opportunities elsewhere, including a booming stock market and real estate business."

This is, however, a typical instance of standing the reality on its head. Evidently, the authors had only the rich in their minds while giving this reason for the poor performance of the NSS.

In its consistent policy of catering only for the rich, the government was understandably oblivious of the fact that the real estate and stock market are simply out of reach for the small savers.

It thus left no stone unturned to shoot them away from the NSS by clamping on them withholding tax and continuing Zakat deductions while drastically reducing rates of return.

By contrast, the earnings for the mainly institutional and wealthy speculators raking in millions from the trading in stocks remained exempt from these exactions.

Small wonder, almost all the savings schemes suffered drastic reversal. The exception was Pensioner's Benefit Accounts. Having received Rs10.2 billion in the first year of it's launching (2002-03), deposits in this scheme plummeted to Rs14.7 billion in 2003 (July-March).

As regards the other, older schemes, Defence Saving Certificates deposits in July-March 2002-03 stood at Rs14.7 billion. The same period of the outgoing year, however, saw a sharp 74.4pc fall to Rs3.8 billion.

Special Saving Certificates suffered the most dramatic setback, thanks to withdrawals surpassing deposits by Rs10.2 billion. During the same period of the previous year, this scheme had received Rs41.3 billion.

Same was the fate of Regular Income Certificates. Withdrawals from this scheme outpaced deposits by Rs11.9 billion in July-March 2002-03 as its loss in the same period of 2003-04 shot up to Rs35.1 billion.

The deposits in Regular Income Certificates decreased from Rs2.9 billion in July-March 2002-03 to Rs0.4 billion in the same period of 2003-04. Bahbood Savings Certificates, instituted for the first time in the current financial year, had its debut with deposits totalling Rs13.3 billion.

The government, says the Economic Survey, reviewed the rate of return on the NSS in July 2003 and January 2004 and reduced rates of return on all the savings schemes on the plea of the inflation rate being 3.7 per cent.

This, despite 11.4pc increase in the Sensitive Price Index and 5.44pc increase in the Consumer Price Index during the first 11 months of 2003-04. The rates offered on the instruments of the NSS, it is revealed in the survey, are reviewed bi-annually and aligned towards the yield on Pakistan Investment Bonds of relevant maturities.

Having reminded the readers that the Pensioner's Benefit Account was launched exclusively for retired government/semi- government employees and the Bahbood Savings Certificates for widows and senior citizens, the survey concludes: "NSS are becoming more of a social safety net in the absence of a proper social security system in the country."

What kind of safety net it constitutes, however, is evident from the fact that the rate of return on both these schemes is Rs840 per Rs100,000 per month. Both these schemes are subject to 10 per cent withholding tax in case of deposits above Rs150,000.

So even these schemes are no favour to the poor people because these serve as conduits for revenue to the government through taxes on the hard-earned savings of the poor.

Even a naib qasid gets more than Rs150,000 as retirement dues. So the actual rate of return is even less than Rs840 for a deposit of Rs100,000. For these schemes to serve as safety nets, commented a retired official on condition of anonymity, a person would need not less than Rs1 million to get enough income from these schemes for keeping the wolf away from the door.

A person who is lucky enough to have this sum may not be dependent on the government for its 'generous' condescension.