With three months still to go, the Centre has almost reached the Rs 40,000 crore (Rs 400 billion) target for small savings collection in the current fiscal.

The figures released by the Controller General of Accounts show small savings collection touched Rs 37,904 crore (Rs 379.04 billion) during April-December 2002.

Of this, the Public Provident Fund accounted for Rs 6,704.58 crore (Rs 67.045 billion), as against the annual target of Rs 9,120 crore (Rs 91.20 billion).

With the bulk of collection expected in the last three months of the fiscal, when people increase their deposits to save on taxes, government officials said the target would be easily achieved.

Public Provident Fund collections were at 59 per cent of the target during the same period last fiscal.

However, on other savings deposits and certificates like post office deposits, National Savings Scheme, National Savings Certificate, and Kisan Vikas Patra, collections stood at 101 per cent of the target at Rs 31,200 crore (Rs 312 billion) during April-December 2002.

The mop-up from this category of savings was at 63 per cent of the target during the corresponding period of 2001.

According to officials, in an environment of declining interest rates on all instruments, small savings are the best bet because of their high-interest bias, of course at a heavy cost to the government.

While the Reserve Bank of India Relief Bonds offer an interest rate of 8 per cent and bank deposits offer below 5 per cent interest, small savings instruments carry an interest rate of 9 per cent this fiscal.

However, what is worrying the central government is that the entire collection will be passed on to the states, as per the scheme formulated by the Y V Reddy committee.