The Hindu Business Line : `Interim' EPF interest rate pegged at 8.5 pc

The Labour Minister, Mr Sis Ram Ola (centre), with the Labour Secretary, Mr P.D. Shenoy (left), and trustees of the Employees Provident Fund at a meeting of the Central Board of Trustees in the Capital on Monday. — Ramesh Sharma

New Delhi , Aug. 9

AMID protests by trade unions affiliated to the Left parties and the BJP, the Central Board of Trustees of the Employees Provident Fund Organisation (EPFO) on Monday lowered the annual rate of interest to 8.5 per cent on the fund deposits of subscribers for 2004-05, compared to 9.5 per cent interest paid in the previous year.

Even as the trade union leaders - particularly those representing CITU and BMS - threatened to take to the streets and launch an agitation against the lowering of interest rate, the Minister for Labour, Mr Sis Ram Ola, tried to cool down tempers by clarifying that the 8.5 per cent rate of interest was only an "interim rate".

He assured the labour leaders that he would try to persuade the Government to come out with a final rate of interest payable to the subscribers on the basis of funds available with the EPFO at the end of the first half of the current fiscal.

However, this will have take into consideration the arrears received till the end of September.

It was also made clear that the recovered amount to be taken into consideration should be for the "corresponding period".

Among the trade unions, only the Congress-affiliated INTUC appeared to have no quarrel with the lower interest rate.

The other trade unions were especially concerned in view of the rise in the inflation level and the consequent erosion in the value of the deposits.

They had initially demanded a much higher rate of interest at 12 per cent, which they said was in keeping with the inflationary spiral.

Mr Ola told newspersons after the meeting of the trustees that the interest rate could be revised upwards in the last quarter of the year on the basis of a fresh review of the income earned by the EPFO on its investment.

Though the EPF Act does not officially permit the trust to pay the subscribers a rate of interest higher than that earned by the trust for the corresponding period, the Minister told the trustees that he would take up the matter with the Finance Ministry, one of the trustees told Business Line.

Mr Ola said that the Finance Ministry will also be urged to issue the notifications for the EPF rates for the previous two financial years at the rate of 9.5 per cent, which are still pending.

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