Comments
With the government facing flak for its decision to cut the interest rate on the employees’ provident fund to 8.7 per cent for 2015-16, the Finance Ministry has said this was suggested to ensure sufficient provisioning for future liabilities.
“We have communicated that the Employees’ Provident Fund Organisation (EPFO) needs to have adequate surplus to meet any shortfalls in the coming year,” said a Finance Ministry official, while noting that the final decision has to be notified by the Labour Ministry.
“There has been a decision to credit interest in all inoperative accounts as well. So, there is nothing wrong with some surplus,” said another person familiar with the development.
Sources said the Labour Ministry, which is understood to be consulting the EPFO, is likely to discuss the interest rate proposal with the Finance Ministry again.
Open to discussions“There can be further discussions if the Labour Ministry so wants. As of now, our suggestion on the interest rate is final,” said Finance Ministry officials.
Labour Minister Bandaru Dattatreya had on Monday informed the Lok Sabha that the Finance Ministry had ratified an interest rate of 8.7 per cent, against the recommendation of 8.8 per cent by the Central Board of Trustees of the EPFO.
In fact, after announcing the “interim rate”, the Labour Ministry was also planning to hike the rate further as it had a surplus of about ₹1,000 crore.
The Finance Ministry’s decision has been perceived as a move to keep the Provident Fund interest rate in sync with the rates for popular small savings schemes, such as the Public Provident Fund and Kisan Vikas Patra, which are now aligned to G-sec yields of the previous quarter.
Unions’ strike callCentral trade unions have opposed the “unilateral” rate cut by the government and have decided to hold demonstrations against it on April 29.
They said the Central Board of Trustees had recommended an 8.8 per cent rate as an interim measure as there was an indication that it could be increased further in view of availability of funds generated by the EPF.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.