New Delhi, May 4: Union labour minister K. Chandrashekhar Rao met Prime Minister Manmohan Singh today to discuss the financial implications of paying an interest rate of 9.5 per cent to subscribers to the employees provident fund. Finance minister P. Chidambaram was also present.

Officials refused to reveal what transpired at the meeting. But they indicated that one of the issues likely to have been discussed was investment plans to bridge the Rs 927-crore deficit the fund faces as a result of the 1 per cent increase. The fund will now have to hit upon a high-yielding scheme to meet the shortfall.

The finance ministry recently ratified the 9.5 per cent interest rate for 2002-03 and 2003-04, which is likely to involve a sum of Rs 66 crore.

The central board of provident fund trustees is likely to meet next month and decide the investment pattern.

The board has already appointed a multinational consultant, Mercer, to suggest investment options.

The Prime Minister had announced the 9.5 per cent rate the same day the government pushed through a higher FDI cap in telecommunication. The move was perceived as a quid pro quo for the Left.

The finance ministry was not happy with the decision as it felt the government will find it difficult to sustain the interest rate in the long run.