Updated: April 26, 2016 1:52:04 am
AFTER backtracking on two consecutive decisions concerning the Employees’ Provident Fund (EPF) over the last two months, the NDA government is set for yet another confrontation with trade unions by announcing the ratification of 8.7 per cent as the interest rate for EPF subscribers for 2015-16, lower than the 8.8 per cent recommended by the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO).
Labour Minister Bandaru Dattatreya, in a written reply to Lok Sabha today, said that while the CBT, on February 16, had proposed an interest rate of 8.8 per cent to be credited into accounts of EPF subscribers, the “Ministry of Finance has, however, ratified an interest rate of 8.7 per cent.”
This is in tune with the government’s move last month, when the Finance Ministry slashed interest rates across a number of savings schemes, including the vastly popular Public Provident Fund, the Kisan Vikas Patra, the National Savings Certificate and the five-year Monthly Income Scheme. This follows a series of rate cuts by the RBI, which has brought down interest rates by 150 basis points over the last 16 months.
Best of Express Premium
When contacted on the EPF rate, Labour Secretary Shankar Aggarwal said that this decision has not been notified yet. “Ministry of Finance has communicated to us the interest rate of 8.7 per cent. We are awaiting the views of the EPFO on the issue,” he told The Indian Express.
Economic Affairs Secretary Shaktikanta Das echoed this: “It (interest rate cut) is an arithmetical calculation. Labour Ministry will examine and consider this decision. This is not the first time that a reduction in interest rate has been done. It was also done four to five years ago. Earlier also, after several rounds of discussions, the rates have been suitably moderated.” Despite several attempts, Central Provident Fund Commissioner V P Joy could not be reached on his phone.
Some CBT members said they were surprised. “There is no precedent of going back to CBT once the interest rate has been decided. The CBT, headed by Labour Minister, has members from Finance Ministry as well and it had recommended a rate of interest. It’s unusual that after the CBT recommendation, the finance ministry has decided to cut interest rate,” said A K Padmanabhan, board member of the CBT and president of CITU. Trade unions, including RSS-affiliated Bharatiya Mazdoor Sangh (BMS), have already announced nationwide protests against the decision, until it is rolled back.
“The Finance Ministry has no role to encroach in decisions of CBT. It is the money of workers, the government is not contributing a single paisa. Government should be encouraging small savers. Even if the government decided to pay 8.95 per cent interest rate, it will save Rs 100 crore. We will hold demonstrations at all EPFO offices nationwide till the decision is rolled back,” CBT member and BMS General Secretary Virjesh Upadhyay said.
His colleague on the CBT, Raman Pandey of Indian National Trade Union Congress (INTUC), said his union will protest against the decision, individually as well as jointly with other trade unions.
The EPFO had offered an 8.75 per cent rate of interest in 2013-14 and 2014-15, which was higher than 8.5 per cent in 2012-13 and 8.25 per cent in 2011-12. The labour minister had in February announced “interim” interest rate of 8.8 per cent for 2015-16 for over 4 crore subscribers. As per general practice, the CBT decides the rate and it is approved by finance ministry.
Earlier, on April 19, under pressure from protesting trade unions, the Centre had cancelled a notification that tightened rules for the withdrawal of Employees’ Provident Fund (EPF) accumulations till the age of 58. The decision was announced hours after violent protests by workers and labour unions, mainly in Bengaluru, against the curbs on withdrawing employer’s contribution from PF accumulations. This was the second rollback on the revised EPF withdrawal norms announced in this year’s budget — the government had to earlier scrap its proposal to make 40 per cent of the corpus taxable on withdrawal.
🗞 Subscribe Now: Get Express Premium to access our in-depth reporting, explainers and opinions 🗞️
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.