In order to address the immediate concerns of savers, it is necessary to limit the inter-year movement of interest rate fluctuations within tolerable levels. In fact, these concerns supersede the need for aligning the administered interest rates to market rates.
Further, it is also envisaged to offer a higher interest rate to Senior Citizen / Pensioners by benchmarking those securities with G-sec of longer tenor and adding a spread over the benchmark (Government of India, 2004). A cursory review of India’s social insurance framework (Box 1) suggests enormous gaps, both in coverage and in the regulatory structure.