The finance ministry estimates that it will collect only about Rs 4,000 crore (Rs 40 billion) in this fiscal from the recently introduced Senior Citizens Savings Scheme.

This would be almost a quarter of the Rs 19,300 crore (Rs 193 billion) that the ministry had garnered from the three schemes being phased out in 2003-04.

These include the 6.5 per cent Savings (non-taxable) bonds, the Deposit Scheme for retiring Government Employees and a similar scheme for retiring employees of Public Sector Corporations.

According to ministry officials, the lower receipts from the Senior Citizens bond, which would carry a rate of interest of 9 per cent, can be attributed to the upper investment limit of Rs 15 lakh (Rs 1.5 billion) set for the Scheme.

The government has set the limit to prevent diversion of funds by high net worth individuals to the bond to take advantage of the attractive interest rates. The officials also said since the new Scheme does not carry any tax relief, this has further reduced its attractiveness for investors ding investment planning. In addition, a quarter of the fiscal year had already elapsed by the time the Scheme has been launched on August 1.

The Centre would treat the funds realised from the Senior Citizens Scheme as small savings and would accordingly pass the same on to the states.

The finance ministry had realised about Rs 18,200 crore (Rs 182 billion) from the 6.5 per cent (non taxable) bonds in last fiscal.

The two Deposit Schemes for government and public sector employees had also realised Rs 1,030 crore (Rs 10.3 billion) as per the revised estimates presented by the ministry for 2003-04.