‘Is 8.65% EPF interest rate sustainable?’

rate, failing which the Centre won’t be abletoprovidefunds,”aseniorfinance Ministryofficialtold The Indian Express.

The Finance Ministry has also soughtdetailsfromlabourministryon the number of inoperative accounts. “We have sought details of the total number of accounts with segregation of active and inoperative accounts. We wanttoensurethatcontributingmembers do not suffer at the cost of inoperative accounts,” another official said.

The Labour Ministry, the officials said, is yet to respond to the queries of the Finance Ministry.

On Tuesday, Labour Minister Bandaru Dattatreya had said that both ministries were on the same page regarding the EPF interest rate. “The Labour Ministry and the Finance Ministry (view) is the same. There is no differenceon8.65percentrateofinterest on EPF. It is in the process and I will pursue it personally,” Dattatreya said.

After its 215th meeting in December, the CBT of EPFO recommended an 8.65 per cent interest rate for 2016-17, the lowest in four years. According to calculations presented at the meeting, retaining the interest rate atlastyear’s8.8percentwouldhaveresulted in a deficit for 2016-17 at Rs 383.82 crore. At a lower interest rate of 8.7 per cent, there would have been a marginal surplus of 69.34 crore. At 8.65 per cent, the rate proposed by the CBT, the projected surplus for 2016-17 was pegged at Rs 295.91 crore.

Last year, the Finance Ministry approved a lower EPF rate of 8.70 per cent for 2015-16, after the Labour Ministry announced an 8.80 per cent rate of interest.aftertradeunionsprotested,the Finance Ministry reverted to the initial announcement of 8.8 per cent interest rate for 2015-16.

The Finance Ministry has been askingthelabourministrytobringtheepf interest rate in alignment with other small savings schemes as it continues tobethefixedincomeinstrumentwith the highest return.

In December, the government had kept interest rates on small savings schemesunchangedfromtheprevious quarter for January-march.

Interest rate on Kisan Vikas Patra has been pegged at 7.7 per cent, while that for Public Provident Fund is 8 per cent and on term deposits 7-7.8 per cent. The highest interest rate among the small savings schemes is for Sukanya Samriddhi Account Scheme and 5-year Senior Citizens Savings Schemes at 8.5 per cent each for the January-march quarter.