The labour ministry has said it can invest part of the Rs 5-lakh-crore provident fund corpus in the stock market, provided the finance ministry guarantees safety of workers’ money.
The finance ministry has been insisting that a part of employees’ provident fund corpus should be invested in equities to earn better returns, but the move has been resisted by the labour ministry on apprehension of high risk attached to such investments.
“...If the investment in the capital market is so good, there should be no problem for the government to provide a guarantee regarding the safety of workers’ capital funds and a reasonable rate of return on the capital,” Labour Secretary P C Chaturvedi said in a letter to Finance Secretary Ashok Chawla.
The Central Board of Trustees (CBT), the highest policy-making body of the Employees Provident Fund Orgnisation (EPFO), headed by the labour minister, had expressed its reservation on investing retirement fund in stock markets at its meeting on September 15.
The finance ministry had wanted the labour ministry to bypass CBT and make enabling provisions to allow provident funds to invest part of their corpus in stock market.
Earlier in July, in a letter to Chaturvedi, Chawla had referred to the changes by EPF schemes earlier without any discussion in CBT and said: “It (the labour ministry) can take a similar view on the issue of investment pattern.”
However, the labour ministry forwarded the letter to EPFO to take a view on the matter and the trustees last month decided not to invest in stock markets.
The finance ministry wants the labour ministry to follow investment pattern notified by it in August, 2008, which provides for investing up to 15 per cent of the corpus in stock markets.
