New Delhi: India’s retirement fund manager and central labor ministry will defend the interest rate given to 60 million subscribers in the beginning of this year, despite the concern of the finance ministry that this rate is very high, at least three officials said that Are familiar with development
The Employees Provident Fund Organization (EPFO) and the Ministry will celebrate and communicate the decision to uphold the rate of 8.65% to “higher” and the authorities will, on condition of anonymity, officials said.
EPFO had raised the interest rate on provident fund deposits on February 21, 8.65% for 2018-19, and 8.5 basis points in 2017-18 to 10 basis points. It is the same as 2016-17 but less than 8.8% given in 2015-16. However, news agency Reuters reported on Friday that the finance ministry has asked for a lower rate.
“The Central Board of Trustees of EPFO is a trilateral body, and it also has representation from the Finance Ministry. When the decision was taken, it was not unanimous. Four months after the decision, you can not go back. The message will also be far-reaching for the working class along with the government officials, “a government official, three people first said above.
According to another official, the Labor Ministry believes that since the government does not pay subsidy at the EPF rate and the payment is based on the investment return of the EPFO, there is no reason to punish the working class by reducing their yield. Not “. Since the payout decision of 2018-19 was based on the calculation of two rounds and the EPFO was left with surplus corps, they would be able to explain to the finance ministry before depositing the interest to their customers.
“The Secretary said that there is no plan to reduce the interest rate of EPF,” Labor Secretary Hiralal Samaria said whether the finance ministry has decided to push the EPFO to cut rates. Now, when the EPFO’s Central Board of Trustees (CBT) decided, its officers were a part of the decision.
Quoting a memorandum of the Finance Ministry, Reuters said on June 27 that the big factor behind the suggestion of reducing rate was a concern that “high returns will hurt the economy by reducing the ability to lend banks at attractive rates. “.
The news agency said in its report, “Therefore, the Ministry of Labor and Employment is advised to consider the interest rate for the financial year 2018-19 which does not fully utilize the surplus of the previous year and is reasonably accountable. Higher surplus leaves. ” .
However, the retirement fund body had said after the CBT meeting on February 21 that its calculation shows that after paying 8.65% in 2018-19, the EPFO will be left with only surplus of `151 crore. This surplus is less than sur 586 million surplus in 2017-18.
“Our understanding is that the EPF rates have very little effect on bank rates because banks do not borrow much from the body. Second, when we went to the equity market three years ago and gradually increased our exposure to 15%, then the government’s argument was that it would increase the returns for the EPFO subscriber, which would be able to increase the returns every month Contribute. When the corpus occurs, how do we justify low rates? EPFO subscribers should not always be in the receiving end. It is their hard work and therefore, EPFO indirectly competes with the national pension system and critics always argue that the yield of EPFO is low. This official further said why do it less, “a third government official said. The political message will be that you will increase the rate before the election and you will reduce it after winning the election.”
Labor Minister Santosh Kumar Gangwar said in February after the meeting of CBT, “We are working for the working class and it shows an increase in interest rates that we respect their trust.” Second term of the Narendra Modi government. The Labor Minister is the President of CBT, which is the top decision-making body of EPFO.
“Are we going to deceive the working class? A decision was taken and after four months, you suspect that to reduce rates, ask them, “AK Padmanabhan, a CBT member and head of the Center of Indian Trade Union said.