The labour ministry is optimistic that rising interest rates would help in better returns on the Employees Provident Fund (EPF) for 2011-12. Labour and employment secretary P C Chaturvedi tells Santosh Tiwari a final decision on the EPF interest rate would be in December. Edited excerpts:
Don’t you think it would be difficult to retain a 9.5 per cent interest rate for the EPF this year?
Why?
You had a Rs 1,700 crore surplus as cushion last year for raising the interest rate from 8.5 per cent to 9.5 per cent. For 2011-12, this would not be there.
How do you know? You read every day in the paper about interest rates going up. Our approach is to provide maximum return to the employees. Why should anybody feel at this point of time that it is not possible? Our approach is to give the maximum that is possible. One should be optimistic.
Which means your initial calculations suggest 9.5 per cent would be possible?
Today, it is premature to do any calculation because we have to see the yield that is coming during the year. We will come to know some time in December, the yield and the situation, and then we will take a decision. We need it for next year, so there is no hurry. By December, we will have good data, nine months’ data. We will be in a better position to decide.
Amendments have been proposed in the EPF Act with regard to the exempted trusts. How will it help the employees of those companies?
Comprehensive amendments in the EPF Act have been approved by the Central Board of Trustees. They have come to the government and we are processing it further, for taking it to Parliament.
They relate to management of funds by the exempted trusts?
Yes. The proposal is that we will give exemption but the custody of funds will be with EPFO, so that in case something adverse happens to a company, the workers’ money is protected. The prime concern of the Provident Fund organisation is security of the money of poor workers. We have several cases where companies have gone sick, they had taken exemption and workers are not getting their provident fund. So, this situation has to be rectified.
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Will this also improve returns on the investments of these exempted trusts?
We had examined returns of 40-45 companies and found the return in some of the trusts was less than the PF organisation. Why should it be like that? Exemption is given for two reasons. One, they will deploy funds better. Of course, they have to follow the same pattern the PF organisation follows. And, two, it will provide quick disbursal to employees. Some trusts are having better yield and some do not.
What about the investment decisions?
The administrative arrangements will be by the exempted trusts. If you are an employee with the exempted trust, your payment will be given by them. Every month, whatever be the surplus, will be transferred to the provident fund. The money will be safe and the investments will be done by the provident fund.
Are labour reforms on track?
All the Labour reforms and proposed amendments in various labour laws are under process.
We are in the process of amending the Factories Act, Minimum Wages Act, Building and Other Construction Workers Act, Contract Workers Abolition Regulation Act, then Child Labour Prohibition and Labour Regulation Acts. We have already introduced two bills, amendment in the Mines Act and exemption from filing returns. It is a continuous process. We are in tune with the times.