New Delhi: The labour ministry has assured Employees’ Provident Fund (EPF) members that the interest-rate payout for the fiscal year ending March will be raised to 9.5%, though the finance ministry had objected to the 1 percentage point increase.
“I am assuring our millions of customers that they will get 9.5% interest this fiscal,” labour secretary Prabhat Chaturvedi said in an interview in Delhi on Thursday. “Difference of views among ministries is not an issue. They have some questions and we have explained them.”
The EPFO is scheduled to discuss the issue at a 15 February meeting with all stakeholders, he said.
In September, the central board of trustees (CBT) of the EPF organization (EPFO), which comes under the Central labour ministry, decided to increase the interest rate from 8.5%. This was to be adjusted against a surplus of Rs1,731 crore accumulated over the last 58 years. The finance ministry, which is seeking to curb the fiscal deficit to targeted levels, had written to the labour ministry questioning the decision.
It was the job of the labour ministry to secure government approval, Chaturvedi said. “And I will get it for EPF account holders.”
A senior finance ministry official said on condition of anonymity that the finance ministry may not continue to block the move to raise the payout rate.
Currently, there are some 80 million EPF accounts, of which 30 million are inoperative. “At the macro level, we have calculated it and there will be no problem related to the surplus.” Also up for discussion at the 15 February meeting is a finance ministry proposal to invest a portion of the corpus of more Rs3 trillion in the stock market for better returns. Currently, the money is invested in government securities, public sector unit bonds and a small portion in private sector bonds.
The labour ministry had, in turn, sought an assurance on the rate of interest because it involves the savings of those who are economically weak and as stock market returns can be volatile.
“They have now expressed their inability to give an assurance on a fixed rate of interest,” the labour secretary said. “We will also discuss the issue in the 15 February meeting and then inform the finance ministry about our stand,”
Central provident fund commissioner Samirendra Chatterjee told Mint in an interview on 23 September that the surplus had been calculated by reviewing balance sheets from the EPF’s 1952-53 inception.
Sanjiv Shankaran contributed to this story.