Defending the decision of Central Board of Trustees (CBT), the highest decision-making body of the Employees’ Provident Fund Organisation (EPFO), to lower the interest on PF deposits for 2021-22 to a four-decade low of 8.1%, finance minister Nirmala Sitharaman on Monday said the rate reflected the current market realities, adding that it was still higher compared to rates offered under other fixed income schemes.
On the approval being sought for additional spending for 2021-22, she said that the government has borne a higher cost of fertilisers through enhanced subsidy instead of passing it on to farmers.
Pointing out that the Centre is transferring resources to states promptly, the minister said the revised estimate of Rs 7.45 lakh crore devolution of the state share in central taxes for the current financial year, has already been released.
Comparing the EPFO rate to other schemes, she said Sukanya Samriddhi Yojana offers 7.6% interest, Senior Citizen Saving Scheme 7.4%, Public Provident Fund 7.1% and State Bank of India’s 5-10 year fixed deposits 5.5%. The Central government securities’ average rate across certain maturities is 6.28%, she said.
“For 40 years it has not been brought down. There are today’s realities which do keep us in the context of decisions being taken by the Central Board of EPFO,” Sitharaman said in her reply to a discussion on Appropriation Bills in the Rajya Sabha.
On March 12, the Central Board of Trustees of the EPFO decided to lower the interest on PF deposits for 2021-22 for its nearly 6.5 crore subscribers. This is the lowest EPF interest state since 1977-78 when it stood at 8%. The PF rate for 2021-22 will be operationalised after the finance ministry approves it.
Responding to questions on the pre-IPO valuation of LIC, the minister said that the embedded value (EV) of the state-run insurer was calculated in an “extremely scientific way” and has been disclosed in draft IPO papers filed with SEBI. The EV is pegged at Rs 5.4 lakh crore.