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Govt takes u-turn on EPF, agrees to 8.8 pc interest rate
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SME Times News Bureau | 30 Apr, 2016
Bowing to persistent pressure
from trade unions and political parties, the Centre on Friday increased
the interest rate on employees provident fund (EPF) deposits to 8.8
percent from 8.70 percent announced earlier for 2015-16.
"I am
happy to tell you that the EPF rate has been increased to 8.8 percent,"
Labour Minister Bandaru Dattatreya told reporters in New Delhi.
The
provident fund rate was 8.75 percent in 2014-15 and the Central Board
of Trustees (CBT) had recommended to make it 8.8 percent for this
fiscal. However, the finance ministry had rejected the recommendation
and had approved only 8.70 percent interest, citing lower earnings.
"The
protest was successful with workers across the country participating in
it," Centre of Indian Trade Union (CITU) president A.K. Padmanabhan
told IANS over phone.
Padmanabhan is also a member of the Central Board of Trustees (CBT) of EPFO.
Most trade unions had protested the decision and the issue was also raised by political parties both in parliament and outside.
Trade unionist and Communist Party of India-Marxist MP Tapan Kumar Sen had also raised it in the Rajya Sabha.
Trade
unions had threatened to intensify their agitation from September if
the government did not comply with the demand of higher EPF interest
rates.
All India Trade Union Congress (AITUC) general secretary
D.L. Sachdev termed the Friday protest call by the central trade unions
as successful. "We oppose even a slight reduction in the
interest rate after the recommendation by the CBT. The CBT had
recommended 8.8 percent whereas the central government reduced it to 8.7
percent," he said.
According to Padmanabhan, the argument that
interest rates on public provident fund (PPF) and other small savings
schemes have come down and the employees provident fund interest rate
cannot be immune is not sustainable.
"The corpus belongs to the workers and the interest is paid out of income from the corpus," he said.
As
the government decided to agree to 8.8 percent interest rate,
Padmanabhan said this is the third time the BJP-led central government
is backtracking on its decision faced with strong opposition.
On
April 19, close on the heels of violent agitation in Bengaluru and also
demand from trade unions, including from RSS-affiliated Bharatiya
Mazdoor Sangh (BMS), the government had withdrawn its new rules of
provident fund withdrawal.
Padmanabhan said EPFO has the necessary funds to pay higher interest rate.
"The
CBT of EPFO is the final authority on the all matters. As per the EPF
Act, the CBT has the full powers. All these years the central government
agreed to the recommendations of the CBT," Padmanabhan said.
According to him, even with offering an interest rate of 8.95 percent, the EPFO will have a surplus of around Rs.91 crore.
Welcoming
the government's decision, national secretary of the All India Trade
Union Congress Vidya Sagar Giri told IANS: "If the government has rolled
back its decision then it is good."
Calling the government's
move anti-labour, Giri said: "The government is only worried about
lending money to corporates at lower interest rate and that too on the
cost of the poor labourers."
He also slammed the government for
behaving like a dictator and said: "The government has become a
dictator. The EPFO's CBT, the apex body during a meeting held in
February this year, had proposed an interim rate of interest at 8.8
percent to be credited to the EPF subscribers for 2015-16 in the
presence of Union Labour Minister Bandaru Dattareya."
"How the finance minister can overlook the decision of the apex body?" he wondered.
Sachdev,
meanwhile, claimed that the central government "wants to dilute the PF
and direct the funds to New Pension Scheme and also to the stock
markets".
"Social security schemes cannot be left to the
vagaries of the stock market," he said, adding that the government seems
to be going towards the goal of making PF an optional scheme for the
workers which is not good.
According to the new norms proposed
earlier this year, subscribers would not be allowed to claim withdrawal
of PF after attaining 54 years of age, and would have to wait till 57.
The
earlier norms allowed contributors or subscribers to claim 90 percent
of their accumulations in their PF account at the age of 54 years, and
the final claims to be settled just one year before their retirement.
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