Press Trust of India
New Delhi, April 25: Setting aside retirement fund body EPFO trustees’ decision, the Finance ministry lowered interest rate on PF deposits to 8.7 per cent for 2015-16, evoking strong protest from trade unions that dubbed the move as ‘anti-labour’. As against the decision of the Labour Minister-headed Central Board of Trustees’ to provide 8.8 per cent rate of interest on PF deposits for 2015-16, the Finance ministry has approved 8.7 per cent interest rate, which has implication for over 5 crore subscribers of the Employees’ Provident Fund Organisation (EPFO).
“The (EPFO’s apex decision-making body) CBT, at its meeting held in February 2016, had proposed an interim rate of interest at 8.8 per cent to be credited to the accounts of EPF subscribers for 2015-16. The Finance ministry has, however, ratified an interest rate of 8.7 per cent,” Labour Minister Bandaru Dattatreya said in a written reply to the Lok Sabha Monday. Trade unions including RSS-backed Bharatiya Mazdoor Sangh (BMS) have lodged their protest against the Finance ministry’s decision of lowering the interest rate approved by the CBT.
“BMS strongly condemns the cut in EPF interest rates an will hold demonstrations at EPF offices on April 27,” BMS General Secretary Virjesh Upadhyay said, adding the Fund is managed by the CBT, an independent and autonomous body. “The step taken by the Finance ministry to over-rule the recommendation of the CBT is not acceptable. It is a wrong step and is an encroachment by the Finance ministry in EPF’s functioning,” he said. Echoing similar views, Indian Trade Union Congress Vice President Ashok Singh said, “It is wrong. When the CBT agreed on 8.8 per cent, who is Finance Minister Arun Jaitley to interfere in it.” He agrued, “The government does not provide any monetary support to EPFO and it is the workers’ money. Thus the government has no right to interfere in this. We will strongly protest it and it will also be an issue in the Bharat Bandh on September 2.”
This is probably the first time that the Finance ministry has not given concurrence to the rate of interest on EPF as decided by the CBT, which is headed by the Labour Minister. The latest move comes on the heels of the government withdrawing two proposals pertaining to EPF. Buckling under pressure, the government rolled back its move to tax EPF as well as tighten withdrawal norms. The EPFO had provided 8.75 per cent rate of interest in 2013-14 and 2014-15, which was higher than 8.5 per cent in 2012-13 and 8.25 per cent in 2011-12. Its estimates, worked out in September, projected that the body can easily pay 8.95 per cent rate of interest as it would leave a surplus of Rs 100 crore. The EPFO pays rate of return to its subscribers on the basis of returns it generates from its investments. However, despite the employees’ representatives’ demand for 9 per cent rate of interest for the fiscal, the CBT at its meeting held on February 16 decided to provide an interim interest rate of 8.8 per cent for 2015-16. Later, Dattatreya had assured that the Employees’ Provident Fund Organisation will not revise its interim interest rate of 8.8 per cent downward for 2015-16.
