With employees’ protests fueled by Opposition support, the Government on Friday corrected its decision and agreed to increase interest rate on provident fund deposits to 8.8 per cent for 2015-16 from the 8.7 per cent as decided by it earlier. Surprisingly, Finance Minister Arun Jaitley, for the third time in two months, took U-turn again to bring back smile on the face of salaried people in the country.
The announcement comes after continuous protests by labour unions and the Opposition over the Government’s decision for directing employees to get 8.7 per cent interest on their accumulated employees’ provident fund (EPF), ignoring the recommendations of a panel that monitors the massive savings scheme.
last month, the Government had to roll back a Budget proposal by the Finance Ministry to tax EPF withdrawals. The rollbacks on both the decisions followed protests from employees and their unions. “I am happy that our Finance Minister has agreed for 8.8 per cent interest to be given for EPF workers for 2015-16. We will issue a notification of 8.8 per cent interest rate immediately,” labour Minister Bandaru Dattatreya told reporters here.
Dattatreya, however, clarified that the Employees’ Provident Fund Organisation’s (EPFO’s) apex-decision making body Central Board of Trustees headed by him, in its meeting held on February 16, 2016 at Chennai, recommended 8.8 per cent interest to be credited to EPF workers for the 2015-16 which would leave a surplus of Rs673.85 crore.
The Minister also said that the Finance Ministry had sought clarification on interest to be credited to inoperative accounts and it was clarified that interest of 8.8 per cent was (decided) after taking into consideration the inoperative accounts also.
He also informed that EPFO updates about 15 crore accounts annually and only 2.89 lakh accounts have to be updated as of March 18, 2016. When asked about the tussle with Finance Ministry, the Minister said, “Finance Ministry advises all the ministries. When interest rates were falling they wrote a letter to us and we fixed the interest keeping that in view.”
The decision of the Finance Ministry comes in the backdrop of a nationwide protest by 10 central trade unions opposing the Finance Ministry’s decision to lower EPF interest rate by 10 basis points.