Tags:
Journalism of Courage
The trade unions say they will protest against the cut in interest rates on the Employees Provident Fund to 8.5 per cent this year. It is ironic that this issue is deemed so important, when the impact of the cut on an average worker is extremely small. As this newspaper had shown in a story on July 16, 85 per cent of EPF members have a balance of less than Rs 20,000. In fact, the average account balance is Rs 2938. At 9.5 per cent the interest accruing on this balance was Rs 280. At 8.5 per cent it will be Rs 250 8212; a fall of Rs 30 for the year for the average trade union member. The activist who takes a bus to go to a dharna on this issue will spend more on transport. And if he joins even a day8217;s token strike, he will lose the equivalent of anything like a decade8217;s worth of losses on his PF interest! Even for the highest deposit holder among this bottom 85 per cent, the difference is Rs 200.
This interest subsidy, however, translates into a payout of Rs 927 crore for the government, the reason it rightly considers it imprudent to sustain this drain. Those who stand to gain are the richest 15 per cent. We must be a rare nation to provide statutorily mandated high interest incomes tax free to some of our highest wage-earners. The interest subsidy is proportional to the balance held by a member. It is the rich who gain by a hike in rates. Out of the total subsidy, Rs 788 crore will line their pockets. Surely, the Left and other TU leaders, instead of demanding a subsidy for them, should be campaigning for larger pension reform that pushes them out of the system.
