People's Democracy

EPF INTEREST RATE

 CITU Fears It May Be Reduced To 8 Per Cent

CITING media reports that the interest rate on Employees’ Provident Fund (EPF) may not be continued at the present rate of 9.5 per cent from April 2004, the CITU has urged the union labour ministry to clarify immediately the position in respect of the interest rate on EPF as applicable from April 1, 2004.

The CITU general secretary, Chittabrata Majumdar, in a letter written to the labour secretary also raised certain procedural issues and expressed apprehension that the interest rate could be reduced up to 8 per cent from the present 9.5 per cent.

The letter says: “It is a time honoured practice for the CBT to meet and make its recommendation to the Government of India on the rate of interest at which the members of the EPF should get the credit in their accounts on monthly running balances from April 1, every year. This exercise must in the normal course be completed before March 31 every year. We learn that as on date no meeting of the CBT itself has been convened for this purpose”.

Incidentally, it may be recalled that both the CITU and the AITUC have been denied representation in the Central Board of Trustees (CBT) of the EPF, when it was reconstituted in March last year.

The CITU pointed out that even for the last two years viz. 2002-03 and 2003-04, there had been no official notification issued by the union government on the rate of interest on EPF, which leaves a question mark hanging on even the interest at 9.5 per cent credited by the EPF Organisation to the accounts of the EPF members during these years, as it lacks statutory backing.

The CITU letter cites that “there is a proposal to restrict the rate of interest on EPF to the administered rate of interest notified by the Government of India for the small savings, SDS, GPF, PPF etc. from April 1, 2004. As this rate as obtaining from April 1, 2003, notified in the budget of 2003-04, is only 8 per cent - there being no change announced in the interim budget for 2004-05 - it is gathered that the members of the EPF would get their accounts credited with interest at this rate only from April 1, 2004. This could result in a reduction of 1.5 per cent from what has been obtaining during the last two years, bringing down the interest to 8 per cent”.

In such circumstances, the CITU has argued that reports suggesting that the interest rate reduction would only be to the extent of 0.5 per cent, i.e., discontinuance of 0.5 per cent golden jubilee bonus declared last year, were a deliberate misstatement. And by keeping even the truncated CBT in dark and allowing the matter to linger on without a proper decision, the over 3.2 crore subscribers of the EPF Scheme are being taken for a ride by the government, accused the CITU.