The Telegraph
Since 1st March, 1999
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Singh tempers PF rate claim

New Delhi, Dec. 16: Reviving the Left campaign for increasing the provident fund interest rate, a CPI leader today claimed that the Prime Minister had agreed to raise the payout to 9.5 per cent, but Manmohan Singh later clarified that he had only promised to consider a revision.

Hours after CPI leader Gurudas Dasgupta said the Prime Minister had agreed to increase the rate by one percentage point, Singh said: 'I have not said anything... (about increasing the employees' provident fund rate)', when asked about the Left MP's statement. 'I said we will consider it. When Parliament is in session, I cannot make any announcement (outside).'

Dasgupta, who met Singh this afternoon, had said that as he 'understood', Singh has 'agreed to raise the interest rate to 9.5 per cent'.

His statement prompted sources in the Prime Minister's Office to clarify that Singh had assured the trade union delegation that the rate would be considered, but 'did not give any figure'.

An increase of one percentage point would lead to a gap of Rs 927 crore between what the EPF gives to its four crore beneficiaries and what it earns on investments, according to calculations by the central board of trustees of the Employees' Provident Fund Organisation.

Analysts said Dasgupta's assertion could be part of a pressure tactic to force the Congress-led government into yielding one of the core demands of the Left, which is locked in a tussle with the Centre over foreign direct investment ceilings.

The rate of interest on the fund, the country's largest pension plan, was officially lowered from 9.5 to 9 per cent last year, but the trustees of the over Rs 1,12,000-crore corpus had decided to award a half per cent bonus to investors.

However, the trustees have been engaged in a running battle with the finance ministry, which had cut interest payout on bonds in which EPF funds are parked, making it impossible to sustain the high interest rate.

The government, which runs the fund, has been paying a rate of 8.5 per cent in the absence of a decision.

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