A day before the Union Budget, the Government has slashed interest rates on provident fund deposits by 1.25 percentage points to 8.25 per cent for 2010-11.
In 2010-11, close to 5 crore PF subscribers got a 9.5 per cent interest on PF deposits.
The rates were notified on Wednesday by the retirement body, Employees' Provident Fund Organisation, amid the sound and fury following the rail fare hikes.
In a circular dated March 14, marked to all its offices, EPFO says, “It is to inform that the Ministry of Labour and Employment has conveyed the approval of the Central Government…. to credit interest @ 8.25 per cent for the year 2011-12 to the account of each member of the scheme. You are accordingly requested to issue necessary instructions to all concerned for crediting the interest to the members' accounts.''
The PF rates have been slashed despite opposition from trade union representatives in the Central Board of Trustees of the EPFO, including the Congress-backed INTUC, who were pitching for 9.5 per cent.
In its meeting on February 22, the CBT had decided to refer the matter to the Finance Ministry and then get back to the trustees for a final decision.
“They have taken a unilateral and anti-labour decision. All trade unions will oppose it,” Mr B.N. Rai, member, CBT and General Secretary of Bharatiya Mazdoor Sangh, told Business Line .
The CITU General Secretary, Mr Tapan Sen, said, “It is shocking that when during the span of last more than one year, the interest rate for banks and financial institutions has been raised several times for addressing the inflationary situation, the same is being denied to more than five crore workers.”
He said for workers, provident fund was a social security fund, and demanded that the Government immediately rescind its decision.