New Delhi, December 7
Despite vehement protests by trade unions and the Left parties, the Board of Trustees of the Employees' Provident Fund Organisation (EPFO) today decided to reduce the interest rate by a percentage point to 8.5 per cent for the fiscal 2005-06.
The board, however, fixed the interest rate half a percentage more than what the Finance and Investment sub-committee of the EPFO had recommended.
“There will be an additional requirement of about Rs 370 crore, but there would be no burden on the government exchequer. The burden would be on the Labour Ministry to find the additional resources,” Labour Minister K Chandrashekahar Rao told reporters after a four-hour long Board
meet. The board's decision could result in the reserve fund going completely empty.
The government, had last year, revised the EPFO decision reducing the interest rate to 8.5 per cent and restored it to 9.5 per cent after strong opposition from the Left parties and protest by various trade unions.
The board has been forced to lower the interest rate as the Finance Ministry has shown no signs of increasing the Special Depository Scheme (SDS), where about 65 per cent of EPF fund is invested.
The meeting, however, deferred any decision on the investment pattern. The Board, which had withdrawn from the Special Reserve Fund to pay the 9.5 per cent interest to its subscribers, would be looking for other means to pay the interest to the only social security net for its subscribers.
