No difference with finance ministry over EPF rate: Bandaru Dattatreya

Govt on Friday reversed its decision to lower interest rate on the PF deposits to 8.7% for FY16 and agreed to fix it at 8.8%, making it the third rollback since March


A file photo of labour minister Bandaru Dattatreya. Photo: Priyanka Parashar/Mint
A file photo of labour minister Bandaru Dattatreya. Photo: Priyanka Parashar/Mint

Hyderabad: Union labour minister Bandaru Dattatreya on Saturday denied having any differences with the finance ministry over the employee provident fund interest rate.

“There is no dispute between the Ministry of Labour and the Ministry of Finance. The Finance Ministry advises us. They send us a circular or note. In turn, our ministry interacts with them. This is the general process,” Dattatreya said answering a reporter’s question in Hyderabad.

The government on Friday reversed its decision to lower interest rate on the provident fund deposits to 8.7% for 2015-16 and agreed to fix it at 8.8%, making it the third EPF-related rollback since March. “Definitely we are all one. We take decisions for the Government of India. The Labour Ministry is also part and parcel of the Government of India. Till now, I have not issued any notification (on EPF rate). After consultations with the Finance Ministry, now we are issuing notification immediately. So where is the dispute?” he said.

“When interest rates are coming down, if you provide 8.70 per cent interest rate your cushion will be greater. Your resources will be more. Your reserves will be more,” the minister said, justifying the earlier decision of the finance ministry to fix the rate at 8.7%. The roll back came on the heels of government having to withdraw an order restricting withdrawals of employers share in the employee provident fund (EPF) till an employee achieves 58 years of age.

Last month, the government had to roll back a Budget proposal to tax EPF withdrawals. The rollbacks on both the decisions followed protests from employees and their unions. The Employees Provident Fund Organisation has Rs.1,604 crore surplus after offering interest for the year 2014-15 and Rs.28,902 crore was credited to account holders in the form of interest, he said.

The EPFO is estimated to have surplus of Rs.673 crore after offering 8.8% interest during last year.

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