Finmin yields to pressure from trade unions protesting rate of 8.7%
The finance ministry has yielded to the pressure from trade unions by agreeing to notify soon 8.8% rate of interest on the employees’ provident fund (EPF) deposits for 2015-16.
The move would bring cheers to EPF Organisation’s around 5 lakh active subscribers and central trade unions who had denounced the finance ministry’s decision to ratify the rate at 8.7%, despite the Central Board of Trustee’s (CBT) recommending 8.8%.
A seemingly elated labour and employment minister Bandaru Dattatreya said, “I am happy that the finance ministry has agreed to 8.8% rate of interest for 2015-16. The rates will be notified soon.”
This would be third roll-back by the finance ministry in matters related to EPFO in two months under the protest of the trade unions. Recently, it had withdrawn a proposal to tax on EPF and another on barring withdrawal of employers’ contribution to the EPF.
At 8.8%, the returns would be the highest in three years. In the previous two fiscals, EPFO had doled out 8.75% rate of interest to its subscribers. Rates were, however, lower at 8.5% in 2012-13 and 8.25% in 2011-12. Generally, CBT recommends the rate of interest to be accrued to EPF subscribers and the finance ministry ratifies the rate for a particular year.
Justifying the 8.7% rate of interest, the finance ministry had earlier said that the retirement fund body would leave with a surplus of around Rs 1,000 crore for the year 2015-16, lower than Rs 1,604 crore surplus it had in 2014-15, had it doles out 8.7% rate of interest. If offered 8.8% returns, the surplus would get further squeezed to just Rs 674 crore.
The labour ministry, on the other hand, were under tremendous pressure to stick to the CBT-recommended 8.8% rate from the trade unions including the RSS-affiliated Bharatiya Mazdoor Sangh (BMS). The labour minister is also the chairman of the CBT. Trade unions on Friday went on a nation-wide protest against the finance ministry’s decision.
BMS’ general secretary Virjesh Upadhyay thanked prime minister, finance minister and labour minister for “upholding the CBT decision on EPF interest rate.”