New Delhi, Feb. 3
THE Government will step in with the necessary financial assistance to ensure that subscribers of the Employees' Provident fund Organisation (EPFO) actually receive 9.5 per cent interest on their deposits for 2004-05, despite the Finance Ministry's expressed reluctance to bridge the gap between the EPFO's earning and interest liability for the year, the Union Labour Minister, Mr K. Chandrasekhar Rao, told Business Line.
Mr Rao said that the decision to pay 9.5 per cent on EPF deposits was taken by the Prime Minister, Dr Manmohan Singh, himself and that it was a well-thought-out decision.
However, he added that initially the EPFO will try to bridge the gap on its own and would consider making use of unclaimed deposits lying with it.
"The organisation has around Rs 800 crore deposits which have not yet been claimed; of this, around Rs 262 crore will never be claimed. The Central Board of Trustees (CBT) of the EPFO will consider all the possibilities at its next meeting," Mr Rao said.
"I would not elaborate the strategy at this point of time for many reasons but be assured that in case of necessity the Government would step in to take the required steps."
The notification on the interest payable on EPFO deposits would be issued only after the ensuing State Assembly elections are over, he added.
Currently, the total corpus of the fund is Rs 1.28 lakh crore, including Rs 71,000 crore of the Employees Provident Fund, Rs 52,000 crore of the Employees Pension Fund and Rs 4,000 crore of the Employees Deposit-Linked Insurance Scheme.
The projected interest income of the EPFO for 2004-05 stands at Rs 5,919.42 crore.
The interest payment liability, if 9.5 per cent interest is paid, would stand at Rs 6,846.57 crore and the deficit is estimated to be Rs 927.15 crore.
Earlier during the day, the Expenditure Secretary, Mr D. Swarup, told newspersons that the one per cent hike will have no impact on Central Government finances.
The EPFO will have to look for additional income, including arrears due to it and other avenues, to make good the requirements arising out of this decision.
When contacted, the AITUC President, Mr Gurudas Dasgupta, said: "Because of its accounting practices, the EPFO comes out with figures and estimates which are all incorrect. In reality there is no shortfall, nor there is any gap and, actually, there is enough money to pay 9.5 per cent interest. Earlier also, the EPFO has come up with wrong estimates and eventually workers got their returns."
On whether there had been a trade-off between the Government and the trade unions on the issue of raising EPF interest and raising FDI limit in telecom, Mr Dasgupta said that the unions would oppose if the Government increases the FDI limit in telecom to 74 per cent.