Rs 298 cr deficit for EPF

The current interest rate of 9.5 per cent paid on the Employees Provident Fund accumulations has left a hole of Rs 298.21 crore in the balance sheet of the fund for 2003-04.

The annual accounts for the year, showing the deficit, will be adopted by the Central Board of Trustees of the Employees Provident Fund Organisation tomorrow.

The two-day meeting, which began today, will also consider whether the interest rate, which includes a golden jubilee bonus of 0.5 per cent, should be left unchanged or revised upwards. Trade unions have demanded that the EPF rate be raised.

In the run-up to the meeting, various trade unions have met Prime Minister Manmohan Singh. Singh has asked them to ensure that the government does not have to step in with a bailout package as in the case of the Unit Trust of India (UTI). With a 9.5 per cent interest rate in 2002-03, the Fund ended the year with a surplus of Rs 204.52 crore.

A release issued by the labour ministry today says this shows the rate was sustainable at that time, though the finance ministry had asked for the same to be reduced to 9 per cent.

The release adds that for the current fiscal, Labour Minister Sis Ram Ola has also supported trade unions' demand for a hike in the interest rate. He has said, he will "if need be, take up their demands with the finance minister".

The interest rates for depositors to the EPF, was brought down to 9.5 per cent in 2002-03, from 11 per cent, prevailing since July 2000. It was at 12 per cent since 1989-90.

The meeting will also consider the status note on the interest rate for 2002-03 and 2003-04. This is because the rates for these two fiscal have still not been notified by the finance ministry.

This implies that while the EPFO has paid up the dues of its retiring depositors, the accrual to the provident fund of the serving employees in the private sector organisations are yet to be regularised. The total corpus of the EPFO, as on March 31, 2004, was Rs 1,28,036 crore.

This included Rs 71,000 crore in the EPF, another Rs 52,000 crore in the Employees Pension Fund and about Rs 4,000 crore in the Employees Deposit Linked Insurance Scheme.

The release says the meeting while considering the applicable rate of interest for depositors to the EPF, will have to take into consideration the projected income on investments and projected liability of interest payments.