Which Government Schemes Offer Higher Returns Than Fixed Deposits?

While fixed deposits is considered an ideal way to get sure returns regardless of market conditions for risk-averse investors, the increasing costs of living and investing your savings towards low-return schemes could affect your purchasing abilities.

As an alternative, one can turn to other government-backed schemes, which continue to be low in risk and ye help you attain goals like:

• Safe future for children 
• Secure retirement plans 
• Stabilses monthly income
• Some even offer interest rates higher than 5-year FD returns from all banks (except Small Finance Banks).

4 Schemes That Provides Cover Against Inflation

Post Office Monthly Income Scheme (POMIS)

If you're looking out for a stable only income without having to dip into principal savings, POMIS is an alternative.

Current interest rate: 7.4% p.a. (revised quarterly)
Interest payout: Monthly (starts a month after initial investment)
Lock-in: 5 years
Premature withdrawal: Allowed after 1 year with a penalty
Minimum investment: Rs 1,000
Investment cap: Rs 9 lakh for an indivual and Rs 5 lakh for joint
Taxation: Interest earned is taxable basis the individual tax slab

The interest earned is the monthly income. While your principal stays untouched until maturity. However, POMIS is only for adult Indian residents; NRIs are not eligible for POMIS. 

As against, SBI Annuity Deposit Scheme (ADS), it pays both interest and the prinicpal month-to-month basis. This means that your initial investment keeps reducing, and as a result so does your income fro interest. 

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Additionally, SBI ADS currently offers around 6.5 per cent per annum. POMIS beats that with higher stability and capital protection.

Senior Citizens' Savings Scheme (SCSS)

For retired people (above the age bracket of 60-years-old) looking for a steady income, SCSS can be considered a preferable. This may be one of the best government-backed options, especially if your parents have received a lump sum amount, such as a retirement gratuity or final settlement.

Current interest rate: 8.2 per cent p.a. (revised quarterly)
Interest payout: Quarterly
Lock-in: 5 years (extendable for 3 more years)
Premature withdrawal: Allowed with penalty
Investment limit: Rs 1,000 to Rs 30 lakh
Taxation: Interest earned is taxable per the individual tax slab
It's simple, you invest once and get returns every quarter for 5-8 years. All the while, your principal stays untouched. However, even if you do not claim the quarterly interest, it does not earn any additional interest.

Sukanya Samriddhi Yojna (SSY)

If you have a girl child at home, one should utilise SSY to create a long-term financial security linked to her education and marriage. This scheme comes with a high interest rate and full tax exemption. which makes it one of the most rewarding options for goal-oriented savings.

Present interest rate: 8.2% p.a. (compounded yearly; revised quarterly)
Maturity: 21 years from the date of investment or when she gets married (after turning 18)
Contribution period: 15 years
Premature withdrawal: Allowed
For the medical treatment of life-threatening diseases of the girl child
In the event of the guardian's death
Investment limit: Rs 250 to Rs 1.5 lakh p.a. (either lump sum or in multiple instalments)
Taxation: Completely tax-free
You can open an account at any time before your daughter turns 10 years old, and you only need to contribute for the first 15 years. However, the account continues to earn interest until maturity.

National Savings Certificate (NSC)

This allows inbvestors a more predicatble growth without market risk being a factor. If you're an indiviual above the age of 10  seeking a fixed return investment choice, NSC could you tailor-made for you.

Present interest rate: 7.7% p.a. (compounded yearly; revised quarterly)
Payout: At maturity
Premature withdrawal: Not allowed except in case of the holder's death or under a court order.
Minimum investment: Rs 1,000
Where to invest: Post offices across India
Taxation: Interest earned is taxable per the individual tax slab
Unlike FDs, there's no TDS at maturity. Your full maturity value is received without deductions.

Compared to 5-year bank FDs (currently lower yielding) and evenKisan Vikas Patra (KVP) at 7.5%, NSC delivers better returns. It can also be used as collateral for loans.