EPF interest rate tussle may go to PM's court

The battle between the finance and labour ministries over the proposed 9.5 per cent interest rate on Employees’ Provident Fund (EPF) deposits for the current financial year appears to be heading towards the prime minister’s court for resolution.

The issue is set to be raised at the crucial meeting of the Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) on February 15.

D L Sachdev, secretary of the All India Trade Union Congress (Aituc) and member of the CBT, told Business Standard: “We will suggest the labour ministry at the CBT meeting take the matter to the prime minister and seek his intervention.”

Sachdev added: “When there is a conflict between the labour ministry and the finance ministry on this critical issue, obviously, the issue will go to PM.” Central trade unions were, in any case, planning to jointly write to the prime minister if there was further delay by the finance ministry in approving the 9.5 per cent interest rate. “We are waiting for the outcome of the CBT meeting,” he said.

The CBT, in its meeting on September 15, 2010, had taken the decision to give 9.5 per cent interest rate on EPF for this year and had asked for the finance ministry’s approval. The finance ministry had, however, in a letter dated January 11, objected to the decision, questioning the availability of surplus money in the EPFO account to give 9.5 per cent interest this year, compared to 8.5 per cent in 2009-2010.

In its reply, the labour ministry had on January 28 responded to the objections point-by-point, saying EPFO had the money in the surplus account to pay 9.5 per cent interest to its members and requested the ministry to ratify the proposal.

A senior labour ministry official said discussion on the finance ministry’s objection and labour ministry’s reply in the tiff between the ministries was an important item on the agenda for the CBT meeting on Tuesday. The official added the labour ministry had not received any response from the finance ministry till Friday.

“We have an executive committee meeting on Monday. If we get a reply from the finance ministry by Monday, we will certainly place that before CBT in the meeting on Tuesday,” he added. The official said, if the deadlock continued, the future course of action would be decided at the meeting.

Sachdev said: “We want a resolution passed, expressing displeasure on the finance ministry’s stand, at the meeting.”

However, the labour ministry official expressed optimism and said the ministry was of the view that the finance ministry would approve the CBT’s proposal now, since all the questions raised by it had been answered.

Sachdev said that apart from the conflict on 9.5 per cent interest rate, the finance ministry’s suggestion to the labour ministry to bypass CBT in deciding to invest a portion of the EPF money in the capital market would also be taken up at the meeting. “We will certainly express our displeasure on the finance ministry’s view,” he said.

The meeting will be held under the chairmanship of Labour and Employment Minister Mallikarjun Kharge and attended by Labour Secretary Prabhat C Chaturvedi, besides other representatives from the labour and finance ministries. Central Provident Fund Commissioner S Chatterjee and representatives of state governments, employees and employers would also attend the meeting.