By IANS
New Delhi : The trade unions Monday accepted under protest 8.5 percent interest rate on Employees Provident Fund (EPF) for 2006-07, which will involve an outgo of Rs.78.22 billion and put a burden of Rs.4.5 billion on the fund.
"Amid protest by some trade union representatives, it has been decided to pay 8.5 percent interest rate on provident fund," Labour Minister Oscar Fernandes told reporters after a meeting of the Central Board of Trustees (CBT) of EPF.
"The total interest outgo for 2006-07 will be to the tune of Rs.78 billion," Fernandes said, adding that the decision pertaining to interest payment for the current fiscal will be decided later.
Referring to the demand of trade unions to pay a higher interest rate, he said the board had fixed the interest rate for the previous year only.
Fernandes said the board had also discussed the government's suggestion to invest five percent of the corpus in the stock market but no decision was taken.
Successive meetings of the board had deferred the decision on the interest rate on grounds that any move to hike payouts would pressure the exchequer.
Fernandes said the EPF had constituted a sub-committee to assess the board's finances. The report of the sub-committee said that there would be a surplus of Rs.5.95 billion with the board.
Even after paying interest at the rate of 8.5 percent, the fund would have a surplus of Rs.830 million. The EPF has a corpus of Rs.940 billion, including the pension fund.
"The trade unions in a protest letter said they wanted 9.5 percent interest, as below it was unacceptable to them specially at a time when a high interest regime is prevailing in the financial sector," W.R. Varadrajan, secretary, Centre of Indian Trade Unions (CITU), told reporters after the meeting.
"At a time when banks are paying even up to 10.5 percent interest rate annually, the government should come forward to support the board to pay 9.5 percent interest rate by raising administrative rate of interest on Special Deposit Schemes," said Sankar Sen, general secretary, United Trade Union Centre Lenin-Sarani.
The board will submit its recommendations to the finance ministry, which is expected to notify the rate shortly.