On 9.5%, EPF board shuts both eyes, for time being

The Trustees must formally recommend the rate before it can be accepted. But the agenda for the board meeting, a copy of which is with The Indian Express, shows that the Trustees will deliberate on some 31 items—ranging from modernising EPF, to looking at withdrawals from the provident fund account to waiving damages on some companies that did not deposit PF on time.

The one item missing from this list is recommending a rate of 9.5 per cent, even though the Centre has given its go-ahead.

It is understood that the oversight is not accidental. Given that the Trustees had been virtually obsessed with the rate for the past six months, even going to the extent of recommending an interim rate of 8.5 per cent a couple of months back, they would have been more than happy to push for 9.5 pc.

The problem seems to be two-fold. Although the Centre had no qualms announcing the rate, the elections in Bihar provide a convenient excuse for not putting it before the Board, for now. But the other reason seems to be that the Centre has not yet sanctioned the subsidy that would make this rate feasible. Without help from the Finance Ministry, EPFO stands to run up a loss of more than Rs 900 crore if it recommends that rate.

So it has ignored all mention of the newly-promised rate. Instead, its ‘action taken report’ merely touches on its earlier recommendation of 8.5 per cent and adds: ‘‘The matter has been referred to the central government for consideration and notification.’’ There is no mention of the fact that the Centre has already given its verdict.

Given that state elections and the Budget are around the corner, the government was apparently keen to avoid a controversy. But that would have become inevitable had the Trustees been asked to consider the interest rate of 9.5 per cent before a subsidy had been promised.

‘‘We are bound by the rules,’’ said Hind Mazdoor Sabha’s A D Nagpal, who is on the Board of Trustees. ‘‘We cannot recommend more than we earn. That is why it is time that the Centre took a policy decision on the interest rate. It should Trustees know whether it will subsidise it every time it falls below a certain level.’