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INDIA
BUSINESS WORLD -
JANUARY 2006
THE MONTH THAT WAS
EMPLOYEES PROVIENT FUND RATE AT 8.5%
THE labour ministry has notified the 8.5% interest rate for Employees Provident Fund (EPF) for the year 2005-06. An official release said that the EPFO will meet the deficit of Rs 365.89 crore on account of 8.5% interest rate from its own resources. The total interest payout to subscribers would be to the tune of Rs 6889.04 crore as compared to the income of Rs 6523.15 crore. That decision was a foregone since the finance ministry has flatly refused to give a bailout of Rs 700 crore necessary in addition to the year's income to meet an interest payout of 9.5% to subscribers or to allow an amendment of the EPF rules in order to let the Fund access the Unclaimed Deposits Account (Rs 687 crore-odd in August 2005) to cover the deficit projected.
That, in fact, was seen as the last resort after the finance ministry ruled out all other options. The finance and investment committee of the EPFO had, in fact, only recommended an interest payout of 8% based on investment returns but the board later maintained that it could cover a payout of 8.25% to subscribers for the year.
On December 7, however, labour minister Chandrashekhar Rao announced an interest rate of 8.5% for the year after the CBT meeting despite TU objections.
The subscribers of the Employees Provident Fund are to get 8.5% interest on their deposits for 2005-06, according to the notification issued by the labour ministry.
The notification is the last word on the interest rate for the year, nullifying efforts from various TU quarters to keep the interest payout rate to the EPF's over four crore subscribers steady, at 9.5%.Infact, this hikes pressure on Tus to stop ducking the issue of investment of five percent of the around Rs 79,000 crore (as on March 2005) corpus in Mutual Funds and in equity as authorised by the government pattern. |
