The same principal, two different structures
₹9,00,000 deposited into POMIS at 7.4% pays ₹5,550 a month for 5 years — ₹3,33,000 in total interest, with the full ₹9,00,000 principal returned separately at maturity. The same ₹9,00,000 deposited into a 5-year POTD at 7.5% instead grows, through quarterly compounding, to ₹13,04,953.22 by maturity — ₹4,04,953.22 in total interest, over ₹70,000 more than POMIS earns on the identical principal and tenure.
Why POTD earns more total interest
POMIS pays interest out every month, so there's nothing left in the account to earn further interest on — each month's payout is calculated on the same original principal. POTD instead reinvests (compounds) every quarter's interest back into the balance, so later quarters earn interest on a larger base than the original principal.
A third structure entirely, building up through monthly deposits
A Post Office Recurring Deposit works backwards from the other two — instead of starting with a lump sum, ₹5,000 deposited every month for 5 years at 6.7% grows to ₹3,56,829.14 at maturity, on ₹3,00,000 actually deposited (₹56,829.14 in interest) — useful for someone building savings gradually rather than investing a lump sum upfront.
Choosing based on what you actually need
POMIS suits someone who needs steady monthly cash flow now. POTD suits someone who can leave a lump sum untouched and wants to maximize the total return by maturity. PORD suits someone without a lump sum to deposit at all, building toward a goal through regular monthly contributions instead. All three are backed by the same government guarantee — the right choice depends on cash-flow needs, not on which scheme is "better" in isolation.