New Delhi, July 13: The Employees’ Provident Fund interest rate got trapped in a conflicting swirl of demands yet again, forcing the central board of trustees to defer a decision till July 20.
Barring the Congress-affiliated Intuc, all trade unions rejected the government proposal to cut the EPF interest rate — which stands at 9.5 per cent — to about 8 per cent. Only the Congress-backed Intuc said it was “agreeable” to an 8.25 per cent interest rate.
At a marathon four-hour meeting of the EPF board of trustees, “serious differences” cropped up after the Left-affiliated Citu insisted on a hike in interest to 12 per cent.
The last meeting of the board on June 30 had similarly ended in deadlock.
“We have rejected the Centre’s proposal outright and conveyed it to labour minister and chairman of the board of trustees Sis Ram Ola in writing,” the Citu said in a press release after the meeting.
Leaders of the four trade unions — Citu, Aituc, HMS and UTUC–LS — also wrote to Ola proposing that he should lead a team of the board of trustees to the Prime Minister to press for a review. “We record our stand that any proposal on the interest rate on EPF for 2004-05 not in line with the above demand (to raise interest to 12 per cent) is totally unacceptable to us.
“We request the government to reconsider its decision to lower the provident fund interest rate to 8 per cent,” the letter said. Ola promised he would do whatever he could.
Citu secretary W.R. Varadha Rajan said his union would demand that the government hike interest on the special deposit scheme (SDS) to 12 per cent from the 8 per cent fixed by the budget so that the EPF rate could also be raised to 12 per cent.
This is crucial as about 80 per cent of the EPF organisation’s total corpus of Rs 1,28,000 crore is invested in the SDS.
The Sangh-affiliated BMS, too, stood by the 12 per cent demand. In a statement, leader Hasu Bhai Dave said it was the duty of the government to hike interest rates as EPF subscribers largely came from the “poor and downtroddenclasses”.
The Centre has been holding out against the trade unions, arguing that the interest it offers on EPF cannot be higher than the 8 per cent returns it earns from the SDS.
Even keeping the EPF interest rate at 9.5 per cent would leave an uncovered gap of over Rs 927 crore between the interest earned and interest offered to subscribers.
An “artificial” high interest rate of 12 per cent would, in the long run, only hurt subscribers. It would lead to a deficit of about Rs 2,729 crore.