What is good for the parts is not always good for the whole is an old adage. It applies well to the Employees’ Provident Fund Organisation (EPFO) whose board of trustees on Wednesday proposed an increase in the interest rate on the fund to 9.5%, a one percentage point rise. This is sure to bring cheer to many employees in the public and private sectors. But what of the cost to the fund? This move will create a Rs 1,600 crore hole, something the trustees hope to meet using the Rs 1,731 crore surplus in the interest suspense account.
What of the future? Given the higher outgo, EPFO should invest aggressively in the equity market. That will help it earn more and ease the load it bears now. This also promises to impart depth and stability to this market, for EPFO does not believe in fly-by-night investments. This could be a winning formula, if only EPFO believes in it.