The labour ministry has refused to rethink its decision to pay a higher 9.5% interest rate on employees provident fund corpus this year despite objections raised by the finance ministry. “The decision on interest rate has already been taken,” labour secretary PC Chaturvedi told media. “We will certainly take the finance ministry’s approval,” he said.
The labour unions have joined the issue, demanding that the 9.5% rate decided by the central board of trustees of the Employees’ Provident Fund Organisation (EPFO) be confirmed immediately. “The finance ministry’s reservations are totally unreasonable. Why are they hesitating to give workers their own money that was discovered by us in the accounts?” said DL Sachdev, secretary, All India Trade Union Congress and member of the board of trustees.
The labour ministry had announced a higher interest rate of 9.5% for 2010-11, compared with 8.5%, paid since 2005-06, after it discovered a surplus of 1,731 crore in its interest suspense account in a review.
The finance ministry has in a letter disputed the calculations, citing a specially commissioned review by the statutory auditor the Comptroller and Auditor General of India (CAG). The CAG has said the surplus amount cited in the suspense account can’t be verified till all accounts are updated by the EPFO.
Interest suspense account holds money yet to be credited to subscribers account. Surplus funds of 1,731 crore were discovered when the Central Board of Trustees, the top policy making body of the fund, called for an examination of the EPFO’s suspense account since its inception in 1952.
It discovered an error in the basis of calculating interest, correcting which yielded a massive positive balance. “We will respond to the issues raised by the finance ministry,” Mr Chaturvedi said.
Officials in the EPFO said a cushion has been kept by the fund to account for any small errors. Payment of higher interest in the current year will not use up the entire surplus that has been calculated and a part has been set aside for exigencies, the probability for which was very low, the official added.
“The CAG had said that the surplus is non-verifiable till accounts were updated and we agree with that. But they have not said that calculation of interest was incorrect,” the official said, defending the decision. “Updating accounts is a long and labourious process. Workers should not be made to wait that long,” Mr Sachdev said. The issue of EPF funds has been a contentious issue between the two ministries. North Block wants a part of the funds to be invested in equities, but the labour ministry says that it can’t take the risk.