Decision on provident fund rate likely today

With the Left trade unions coming out against any reduction in the employee's provident fund (EPF) rates for this financial year, tomorrow's meeting of the central board of trustees of Employee's Provident Fund Organisation (EPFO) is set to be stormy.

Against a recommendation of an EPFO sub-committee for an 8 per cent rate, both the Right and Left wing trade unions have decided to demand at least a 9.5 per cent rate for 2005-06.

The central board of trustees was scheduled to meet on July 30. But that meeting was put off because of "technical reasons". The November 9 meeting was again cancelled because of former President KR Narayanan's death. The central board of trustees is chaired by Labour Minister K Chandrasekhar Rao.

The finance and investment sub-committee of the EPFO has recommended 8 per cent rate for this fiscal while 40 million subscribers have got 9.5 per cent interest in the last fiscal, resulting in a gap of Rs 716 crore. The deficit was met through the reserve fund, which now was left with a corpus of Rs 250 crore, sources said.

The rate should have been close to 8.5 per cent for not resulting in any deficit as the fund had a corpus of Rs 72,000 crore on March 31, 2004. On March 31, 2005 the corpus grew to Rs 79,000 crore.

Both RSS-affiliated Bharat Mazdoor Sangh and CPI(M)'s trade union wing, the Centre for Indian Trade Union (Citu), have said they will demand at least 9.5 per cent EPF rate. The CPI-affiliated Aituc, too, has made a similar demand.

In fact, former BMS president and its representative in the CBT Hasubhai Dave had said his organisation would seek 12 per cent, much above the last year's. Citu member in the central board of trustees WR Varadarajan has said his organisation will demand that at least a 9.5 per cent EPF rate be given as per Prime Minister Manmohan Singh's "assurance".

According to the Citu leader, the prime minister has promised that the UPA government will not reduce the EPF rate from 9.5 per cent and "we take the assurance for the entire term of the UPA government".

He demanded that the government increase the administered rate of interest on special deposit schemes, where most of the employee provident fund was parked, from the current eight per cent rate, instead of taking help of reserve funds.