Date:14/02/2003 URL: http://www.thehindu.com/2003/02/14/stories/2003021403331200.htm

National

No cut in EPF interest rate

By Our Special Correspondent

NEW DELHI FEB. 13 . The Government today once again ruled out any cut in interest rates on Employees' Provident Fund this fiscal from the current 9.5 per cent, but said the situation would be reviewed next fiscal based on the surplus position.

After a meeting with the Union Finance Minister, Jaswant Singh, the Union Labour Minister, Sahib Singh Verma, reiterated his earlier stand that "the rates on Provident Fund will remain same this fiscal.'' However, "we will review it next fiscal based on the surplus positions.''

According to official estimates, the Employees Provident Fund Organisation (EPFO) as of now has a surplus of Rs. 127 crores .

The meeting has put speculations over the slashing of interest rates at rest at least for this fiscal. There has been a major controversy on the issue with the Finance Ministry having for quite some time insisting on reduction of the rate to 9 per cent in keeping with the low interest regime sought to be enforced by it as a matter of policy and the trade unions opposing it.

In the face of these speculations, Mr. Verma had maintained that there would be no change in the interest rate on PF deposits and that if needed, he would go to the Finance Minister to sort out the matter. The Labour Ministry has all along been of the view that the fund had enough surplus to continue to pay the higher interest rate.

Referring to his meeting with the Finance Minister, Mr. Verma said the Labour Ministry sought a higher Rs. 720 crore plan allocation for pension contribution for workers this fiscal as against the revised budget estimate of Rs. 400 crores. Mr. Jaswant Singh promised to look into the deficiencies in plan allocation and spendings. On pension reform for the unorganised sector, Mr. Verma said "the Government might provide some support in addition to the contribution made by employers and employees.''

The proposal to set up five industrial tribunal-cum-labour courts was also taken up with the Finance Minister. The Labour Ministry also pleaded that tax exemptions, now enjoyed by vocational training institutes in rural areas, be extended to those in cities , Mr. Verma said adding that he has also demanded exemption from customs and excise on imported machinery and on stipends paid to apprentices. Similarly tax exemptions have been sought for medicines of ESI hospitals.