New Delhi, April 29: Ministry of Finance headed by Arun Jaitley, has decided to rollback the cut in interest rate of Employee Provident Fund (EPF). The ministry has decided to increase the interest rate from 8.7 per cent to 8.8. The decision was taken after the Central Board of Trustees (CBT) of Employee Provident Fund Organization (EPFO) asserted pressure on Centre to rollback the drop in interest rate. Also Read - EPFO Likely to Cut Interest Rates in FY21, Final Decision on March 4 | Key Points
Several labour unions, including the RSS’ affiliated Bharatiya Mazdoor Sangh had protested against the government for reducing the interest rate. The unions had vowed to launch a nationwide strike if the interest cut was not rolled back. (ALSO READ: Opposition slams Finance Ministry’s decision to slash Employees’ Provident Fund (EPF) interest rate)
Finance Ministry had earlier claimed that the EPF earnings in 2015-16 was not sufficient to even pay the amount at an interest rate of 8.7 per cent. However, CBT contradicted the claims of the government saying, “The actual surplus amount for 2015-16 will in fact be even higher. A surplus corplus will remain even if the interest rate remains 8.8 per cent.”
“If the government had paid back at an interest rate of 8.95 per cent, an amount of Rs 91.40 crores would have remained in the surplus corpus. If the rates are 8.8 per cent, the surplus left would Rs 673.85 crore. Only a high interest rate such as 9 per cent would had resulted in a deficit of around Rs 102.5 crores,” said EPFO member Brajesh Upadhyay, who is general secretary of Bharatiya Mazdoor Sangh.
Initially, the CBT had demanded an interest rate of 8.95 per cent. However, they have compromised their stand and have agreed for 8.8.