Dec. 11: Prime Minister Manmohan Singh today said Left demands for a higher provident fund interest payment would depend on whether the fund’s managers could afford it.
Speaking aboard the special aircraft carrying him to Malaysia for the East Asia Summit, Singh said: “It’s really a question of what the EPFO (employees provident fund organisation) can afford. There is no scope for budgetary subsidisation of the EPF rate.”
By throwing the ball into the court of the financially strained EPF board, the Prime Minister was indicating that his government was averse to raising the interest paid to 40 million subscribers.
The decision last week to reduce the rate to 8.5 per cent from the earlier 9.5 per cent raised a storm of protest within and outside Parliament with Left and trade union leaders crying foul. The EPFO has pointed out that its finances permit it to realistically pay an interest of 8 per cent but would “try to find resources to pay another half a per cent”.
The Left, whose support is crucial to the Congress-led alliance, however, has been demanding an increase in the interest rate paid by the government’s special deposit scheme where the bulk of the EPF money is parked.
The interest on the scheme is 8 per cent. But the Left and trade unions have been arguing that the Centre should consider raising this rate which, in turn, would allow the EPFO to increase its interest payment. But prime ministerial aides added that this was unlikely and there were no moves on the issue yet.
Singh said: “Last year, too, there was a demand for budgetary support. We made it clear that there would be no budgetary support and this stand remains.”
Asked if he was satisfied with an 8.5 per cent EPF rate as announced recently, Singh replied: “It is not the question of whether I am satisfied or dissatisfied. It is a question of what EPF can afford. If they declare higher rates that they can sustain, I have no problem.”