In a major relief to senior citizens, government on Thursday proposed to introduce a new scheme, called the Senior Citizens Savings Scheme, offering an interest rate of nine per cent per annum, which is above the market determined rate.

Presenting the 2004-05 Budget in the Lok Sabha, Finance Minister P Chidambaram also proposed to continue the Government Savings Bond, carrying an interest rate of eight per cent per annum, while recognising the need for an instrument bearing a slightly higher rate of interest to provide a risk-free avenue to all citizens to save for a longer term.

He also did not make any change in the existing rates of interest on small savings instruments.

Consequently, PPF, GPF and Special Deposit Scheme will attract 8 per cent interest this year.

The Varishtha Pension Bima Yojana may no longer be necessary since the new savings scheme will cover the senior citizens adequately, Chidambaram added.