New Delhi, Feb. 3: After the benevolence, the Rs 927-crore question: who will foot the bill'
The finance and labour ministries are locked in a wrangle over who would bear the cost of the higher interest rate on the Employees Provident Fund announced last night.
The finance ministry has signalled it will make no budgetary provisions to meet even a part of the Rs 927-crore burden that the one percentage point rise will impose on the fund.
Labour minister K. Chandrashekhar Rao believes the fund can defray only a part of the cost by dipping into its surplus ' a practice it had adopted earlier. 'If we have any reserves in the EPFO, they will be made available. For the rest, we will be asking the finance minister to give from his kitty,' Rao said.
But expenditure secretary D. Swarup said: 'There is no plan to give subsidies.'
The finance ministry has been arguing that it would not be possible to pay 9.5 per cent on PF contributions when interest rates are headed southwards. P. Chidambaram was, however, overruled yesterday when the Centre decided to placate the Left with the rate hike as a quid pro quo for increase in the foreign investment cap in telecom.
Rao has said the fund should be allowed to invest in the high-yielding postal deposits, but the finance ministry is opposed to this as well.
EC seeks report
The Election Commission has asked the Centre to explain why it announced the rate hike decision on the eve of Assembly polls. 'We have sought the facts from the government,' EC spokesperson A.N. Jha said this evening.