The Hindu : EPF board to meet on July 8

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Friday, Jun 28, 2002

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EPF board to meet on July 8

By Our Special Correspondent

NEW DELHI JUNE 27. The crucial issue relating to the finalisation of the rate at which interest should be paid to the subscribers of the Employees Provident Fund (EPF) will come up for consideration before the Board of Trustees of the Fund on July 8 in a meeting here.

The board's view will seal the fate of the employees, who have been hoping that they will continue to get an interest of 9.5 per cent, even though both the Labour Ministry and the trustees face tremendous pressure from the Finance Ministry to slash it to 9 per cent.

The Labour Ministry would not be taking any decision on its own without the benefit of the views of the board, headed by the Union Labour Minister as its ex-officio chairman, on the latest communication from the Finance Ministry, the sources said.

Through the communication, the Finance Ministry had virtually conveyed its rejection of the recommendations by the Labour Ministry and the board, which favoured the payment of interest at the rate of the existing 9.5 per cent. The Finance Ministry argued that the recommendation was out of tune with the current economic parameters and policy and programmes.

The higher rate of interest on EPF was not compatible with softer interest and a low inflation regime.

Also, it would not be proper to allow a higher interest rate on EPF while the interest rate on all other saving instruments had been rolled down to the 9 per cent level.

Arguments advanced by the board in favour of the existing rate of interest was that it could afford to pay a higher interest from the fund's income.

Even after paying an interest of 9.5 per cent, the fund would have a surplus of over Rs.100 crores.

The Finance Ministry, however, refused to buy these arguments.

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