The question is about calculating the effective interest rate that the person would earn from their long-term savings scheme.

Option 1 suggests an effective interest of 12%. This is incorrect, as it only considers the standard interest rate of the savings scheme and does not take into account the tax savings resulting from the investment.

Option 2 suggests 18% as the effective interest. This is the correct answer. This is calculated considering both the standard interest rate of 12% and the additional benefit the person gets due to reduction in his tax liability from 30% to 10% on his additional income. The difference in these percentages, i.e., 20% of the invested amount (Rs. 1000) gives an additional income of Rs. 200, which is effectively an additional interest.

Option 3 and 4, 19% and 20% respectively, are also incorrect as these percentages do not correctly calculate the combination of the standard interest and the tax savings benefit.

To sum up, the effective interest is a combination of the standard interest from the savings scheme and any additional benefits as a result of the investment.