EPF rate cut: Deficit still at Rs 366 cr

A day after the Employees Provident Fund Organisation (EPFO) decided to reduce the interest rate from 9.5 to 8.5 per cent, the labour ministry was grappling with funding the resources to bridge the Rs 366 crore shortfall.

The issue rocked Parliament today with the Left parties forcing adjournment in the Lok Sabha during Zero Hour. They also raised it in the Upper House and trade unions are planning to take up the issue at the two-day Indian Labour Conference starting tomorrow.

Like last year, the EPFO intends to dip into the Special Reserve Fund to meet a part of the shortfall. The SRF had a corpus of around Rs 240 crore, of which 50 per cent can be tapped. The EPFO is hoping to raise another Rs 30-40 crore through penal interest from companies that have defaulted on payment of their statutory contribution.

"These are in the nature of non-performing assets which may not be realisable or we may get only a small portion," a labour ministry official said.

Assuming that the EPFO was able to generate Rs 150 crore through the two routes, it would still be left with a shortfall of around Rs 220 crore. "Various options are being explored and we will be in a better position to give the details in a few days," an official said.

Another possibility was to use the resources lying in the administrative fund, which is meant for revamping EPFO. The funds have, however, been barely used as the organisation has limited its administrative expenses mainly to payment of salaries to its workforce.

On Wednesday, Labour Minister K Chandrasekhar Rao had said that the details would be finalised today. The finance ministry also ruled out any bailout, saying that a support to EPFO would mean that the government had to pay higher interest rates to the General Provident Fund as well. Rao had also ruled out support from the exchequer.

While the government showed no signs of compromise, central trade unions are not ready to give up. "All trade unions are meeting this evening and will again meet tomorrow to chalk out their future course of action on this issue," said Gurudas Dasgupta, CPI MP and leader of the party's trade union wing, All India Trade Union Congress.

Earlier, speaking in Lok Sabha, Dasgupta objected to the Labour Minister's announcement about the reduction in EPF rate "outside the House" while Parliament is in session. Only Rs 700 crore was needed to keep the EPF rate at 9.5 per cent, while it involved the interests of 40 million people, he added.

"The government may kindly understand that trade unions and Left parties will not be a stamping machine of the government," said the CPI MP. Basudev Acharya of the CPI (M) also demanded restoration of 9.5 per cent interest rate on EPF. LEFTS & RIGHTS OF IT

EPFO intends to utilise the Special Reserve Funds to meet a part of the shortfall

It is hoping to raise another Rs 30-40 crore through penal interest from companies that have defaulted on payment

Even after generating Rs 150 crore this way, there would still be a shortfall of around Rs 220 crore