"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.
The Finance Ministry, which had previously rejected retirement fund body EPFO's decision to provide 8.8 per cent interest and fixed 8.7 per cent rate for 2015-16, reversed its decision after new data on EPFO earnings came to light, sources said.
The decision of Finance Ministry was based on pure arithmetic calculation and in the interest of all the members of EPFO, they said.
During subsequent discussions, the Labour Ministry clarified that the earning in 2014-15 turned out to be more than the estimates and the same was used to recommend 8.8 per cent interest rate.
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The roll back comes on the heels of government having to withdraw an order restricting withdrawals of employers share in the employee provident fund (EPF) till an employee achieves 58 years of age. Last month, the government had to roll back a Budget proposal to tax EPF withdrawals.
The rollbacks on both the decisions followed protests from employees and their unions.