People's Democracy

ON April 12, a special meeting of the Central Board of Trustees (CBT) unanimously rejected the finance ministry’s directive to reduce the rate of interest on the employees provident fund (EPF) from 9.5 to 9 per cent, aligning it with the interest rate decided by the government for the GPF, PPF etc.

The CBT asked the government to reconsider the earlier recommendations made by the CBT, and reiterated that the interest rate of 9.5 per cent should be continued during the interregnum.

In a written note presented to the CBT, the CITU’s nominee W R Varada Rajan stated, "The prescription by the ministry of finance that the EPF interest rate may be aligned with that of GPF, PPF, etc, is undermining the very status of the CBT and subordinating it to the administrative decision taken by the ministry of finance." The note said while bringing down the rate of interest on small savings instruments under the NSC, NSS etc on successive occasions, the government of India had made the new rate applicable only for future deposits under these schemes. But the government discriminated in case of the EPF by effecting the reduction on the entire accumulations in the SDS.

The CITU note further said, "The CBT had earlier recommended for convening a tripartite meeting to debate the report of the Reddy committee on administered rates of interest and allied issues, before taking any decision thereon. The finance minister has arbitrarily announced in the budget speech this year implementation of the Reddy committee recommendation, which will have a long-term implication, as the rate could plummet to below 7 per cent even for the next year."

The note pointed out that the "total investment of all the three schemes (PF, Pension Fund and Employees Deposit Linked Insurance Scheme) under the EPF as on March 31 was Rs 1,02,163.04 crore, out of which Rs 81,222.84 crore, i e 79.5 per cent vested with the government of India. Thus, the government of India is the sole beneficiary of the reduction in the rate of interest, as it is trying to reduce its interest burden at the cost of 2.6 crore worker-subscribers of the EPF. The workers are already losing over Rs 2,500 crore a year, because of the earlier reduction from 12 to 9.5 per cent. This loss will further go up to Rs 3,064 crore, if the rate is further reduced to 9 per cent."

It was with these considerations in mind that the CBT also asked the labour minister to persuade the government to convene a tripartite dialogue, as recommended by the CBT, before the parliament takes up the budget for voting. (INN)