NSSF:
- NSSF was set up on 1 April, 1999 with an objective to account all the monetary transactions under small savings schemes of the Union Government under one umbrella.
- It was set up in the Public Account of India.
- The net accretions under the small savings schemes are invested in the special securities of various States/ Union Territories (with legislature)/Central Governments.
- States not only can borrow from this account but have the obligation to borrow.
- The minimum obligation of States to borrow from the NSSF has been brought down from 100% to 80% of net collections from 2007.
Why in news?
The 14th Finance Commission (FFC) had recommended that the State Governments should be excluded from the investment operations of the NSSF. The main reason given was that NSSF loans come at an extra cost to the State Governments compared to the market rates which are considerably lower. Following this, Union Cabinet in February 2015 held that this recommendation will be examined in due course in consultation with various stake holders. Later, all states except Arunachal Pradesh, Delhi, Kerala and Madhya Pradesh expressed their desire to be excluded from NSSF investments.