Return on investments to decide EPF interest rate

Written by parul | Parul Chhaparia | Ronojoy Banerjee | Ronojoy Banerjee | Updated: Aug 4 2011, 07:38am hrs
The ministry of labour gave a pleasant surprise last year (2010-11) to 4.72 crore employees provident fund (EPF) subscribers when it announced a 9.5% rate of return. However, this year may not be the same. Labour secretary Prabhat C Chaturvedi, who is retiring this month end, tells Parul Chhaparia and Ronojoy Banerjee that though the ministry is willing to offer same or even more than 9.5% return, the rate of interest would depend on the market yields.

How much rate of interest on EPF are you looking at for this financial year Will you keep it at the same level as last year or more

We would definitely want to give the same rate of interest as last year, if not more. However, how much would that actually be is difficult to guess. Last year, we had a surplus of R1,700 crore. This year, we do not have that. The rate of interest to EPF account holders will depend completely on our market yields. There are four fund managers to manage R3.5 lakh crore provident fund corpus. They invest mainly into bonds and government securities. If their market returns are more then definitely we can look at giving more to the EPF subscribers.

The labour ministry has been in favour of making national floor level of minimum wages statutory for some time. When is it going to happen

Shortly. We have already issued advisories to state governments to have minimum wage floor of R150 from April 1. We have asked them not to pay less than that. Six states have already started following it. But since it is not legally bound, not everyone is following it. Now, we are going to make it statutory soon through amendment in the Act.

Labour strike is becoming a common phenomenon with various manufacturing units. Are you planing something specific to help the industry out with this problem

The ministrys focus is only to ensure the welfare of employees. We are against the exploitation of labour. There are some rules and regulations that every company is expected to follow. If the industry follows it properly, then there is no question of having a problem and therefore, a need for the ministry to intervene. In any case, we have told them (companies) that if they have specific problems, they can approach us.

How do you plan to extend the social security benefits

Social security system in India is very different from the other parts of the world. Here, we are not looking at unemployment allowances, but are looking at generating employment. The simple reason is lack of funds. Where is the money to offer such allowances We have schemes such as Rashtriya Swasthaya Bima Yojana being expanded in phases. Now, the Cabinet has also cleared the proposal to set up a national level social security fund of R1,000 crore for unorganised workers.