EPF rate cut could pinch: PM

With the Left parties and trade unions bracing up for a showdown with the government over the reduction of interest rate on the Employees' Provident Fund (EPF), Prime Minister Manmohan Singh today made conciliatory gestures promising to discuss it with the labour ministry.

"I will discuss it with the labour ministry and the officials on what can be done within the resources of the EPFO," he said at the inaugural session of the Indian Labour Conference here.

"I have taken note of views of trade unions and I recognise that a reduction in the interest rates will hurt EPF subscribers," he said.

Trade union leaders had earlier expressed strong resentment against the reduction of EPF rate from 9.5 to 8.5 per cent and threatened to launch a nation-wide agitation if the rate was not restored.

When asked about this issue later, Finance Minister P Chidambaram told reporters, "That's the decision (reduction in EPF rate) the EPF board has taken. I have not received the minutes of the meeting yet."

North block officials, however, said the ministry would try to ensure that the interest rates were kept as close to 8 per cent as possible, since an increase of 1 percentage point put a pressure of Rs 800 crore on EPFO.

But, the apparently conciliatory gestures from the government's side failed to mollify the Left parties, which stepped up the offensive, issuing a warning to the government.

Addressing a press conference today, MP Nilotpat Basu of the CPI (M) said, "We are warning the government that this approach (on EPF rate) is not acceptable to us...If the government does not delink EPF rate from market forces, battle, confrontation is imminent."

But he refused to elaborate on it saying that the party would decide "when the time comes". CPI MP Gurudas Dasgupta had declared in the Lok Sabha yesterday that the UPA government should not think that the Left parties and trade unions are its "stamping machines".

Basu said except PF virtually no other social security instrument is available to workers. "We are not supporting the government to repeat the neo-liberal agenda of the NDA government...UPA government should remember that the NDA government was defeated by the common people and workers." he said.