From 1 April 2017, interest rates on small savings schemes including the Public Provident Fund were cut by how many percentage points?

Introduction / Context:
This question covers Indian economy and banking reforms. The Government of India periodically revises interest rates on small savings schemes, such as the Public Provident Fund and National Savings Certificates, based on market conditions. In April 2017, there was a revision that slightly reduced these rates, and the question asks by how many percentage points the rates were cut.

Given Data / Assumptions:

• The date of change is 1 April 2017.
• The schemes affected include the Public Provident Fund and other small savings options.
• The change mentioned is a reduction in interest rates.
• The options list several possible reductions expressed in percentage points.

Concept / Approach:
The Ministry of Finance aligns small savings interest rates with market yields on government securities. In the specific quarter beginning April 2017, it announced a modest reduction of 0.1 percentage point in most small savings schemes. This meant, for example, that a rate of 8.0 percent would become 7.9 percent. The correct answer therefore is 0.1 percent, not the larger reductions shown in other options.

Step-by-Step Solution:
Step 1: Recall that the government moved to a quarterly revision of small savings interest rates to reflect market trends. Step 2: Remember the news coverage around April 2017 that highlighted a small, incremental cut rather than a big reduction. Step 3: Identify that the cut was 0.1 percentage point on schemes such as the Public Provident Fund. Step 4: Match this value with the given options and choose 0.1 percent.

Verification / Alternative check:
Official notifications from the Ministry of Finance and press reports from late March 2017 confirm that interest rates on small savings were reduced by 0.1 percentage point for the April to June quarter. Examples include the rate on Public Provident Fund being revised down by exactly 0.1 percentage point. No major source reports larger cuts of 0.2, 0.3, 0.4 or 0.5 percentage point for that specific revision.

Why Other Options Are Wrong:
0.5 percent and 0.4 percent: These would represent significantly sharper cuts, which were not announced at that time. 0.2 percent and 0.3 percent: These values also do not match the precise reduction mentioned in official circulars for April 2017.

Common Pitfalls:
Students sometimes confuse different rounds of rate changes or mix up changes in small savings schemes with changes in policy rates announced by the Reserve Bank of India. Others recall that there was a cut but misremember its exact size, choosing a larger figure because it sounds more dramatic. Keeping track of the quarter wise adjustments and noting that this particular one was a modest 0.1 percentage point cut helps avoid such errors.

Final Answer:
From 1 April 2017, interest rates on small savings including the Public Provident Fund were reduced by 0.1 percent.