Closer to Other Small Sav­ings Plans

The Economic Times - - Econ­omy: Macro, Mi­cro & More -

This is seen as a step to­wards bring­ing the rate closer to those of­fered by other small sav­ing schemes. The fi­nance min­istry had last month re­duced in­ter­est rate on small sav­ing schemes in­clud­ing Pub­lic Prov­i­dent Fund (PPF) scheme and Kisan Vikas Pa­tra to 8.1% and 7.8%, re­spec­tively, from 8.7% in 2015-16.

“The CBT (Cen­tral Board of Trus­tees, EPFO’s apex de­ci­sion­mak­ing body), at its meet­ing held in Fe­bru­ary 2016, has pro­posed an in­terim rate of in­ter­est at 8.8% to be cred­ited to the ac­counts of Em­ploy­ees’ Prov­i­dent Fund sub­scribers for 2015-16. The min­istry of fi­nance has, ho- wever, rat­i­fied an in­ter­est rate of 8.7%,” Labour Min­is­ter Ban­daru Dat­ta­treya on Mon­day said in a writ­ten re­ply to the Lok Sabha.

EPFO’s ad­vi­sory body, Fi­nance Au­dit and In­vest­ment Com­mit­tee, had rec­om­mended that 8.95% rate of in­ter­est was fea­si­ble as it would leave a sur­plus of Rs 91 crore. Ac­cord­ing to its es­ti­mates, pro­vid­ing 9% rate of in­ter­est would have re­sulted in a deficit of Rs 102 crore. The or­gan­i­sa­tion pays in­ter­est to its sub­scribers on the ba­sis of re­turns it gen­er­ates from its in­vest­ments. The de­mand for 9% rate of in­ter­est for 2015-16 by the rep­re­sen­ta­tives of the em­ploy­ees not­with­stand­ing, the CBT at its meet­ing on Fe­bru­ary 16 de­cided to pro­vide an in­terim in­ter­est rate of 8.8% for the fis­cal.

The cen­tral trade unions, in­clud­ing the RSS-backed Bharatiya Maz­door Sangh, slammed the fi­nance min­istry’s de­ci­sion. “BMS strongly con­demns cut in EPF in­ter­est rate. We will hold na­tion­wide demon­stra­tions at EPF of­fices on April 27,” BMS Gen­eral Sec­re­tary Vri­jesh Upad­hyay said.

DL Sachdeva, na­tional sec­re­tary of the CPI-backed AITUC said, “This is un­due in­ter­fer­ence from min­istry of fi­nance when the EPFO in­come jus­ti­fies 8.9% and the board has ap­proved 8.8%. All cen­tral trade unions will protest against this uni­lat­eral move.”

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