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New Delhi, Dec. 7

THE approximately four crore subscribers of the Employees Provident Fund Organisation (EPFO) will have to undergo a loss of one percentage point interest, compared to last year, on their provident fund deposits.

The Central Board of Trustees (CBT) of EPFO on Wednesday finally announced an 8.5-per cent interest for provident fund deposits for 2005-06, against last year's 9.5 per cent.

The Labour Minister, Mr K. Chandrasekhar Rao, who is the Chairman of the EPFO, told reporters that, even for paying 8.5 per cent interest, there would be a shortfall of Rs 370 crore. The Minister said he will not seek Government support for raising this Rs 370 crore but will look at ways of generating resources internally.

With today's decision, the EPFO will be able to disburse Rs 87 crore interest to the two lakh subscribers who have retired since April. The fund is with the EPFO.

In a five-hour meeting, the board authorised the Minister to take a decision. Mr Rao, after consulting the Labour Secretary and other senior officials of his Ministry, decided to fix the rate for this year at 8.5 per cent.

Last year too, determining the final interest rate for PF deposits was a long and strenuous effort that spilled onto this year. The EPFO had to dig deep into its reserves to pay over and above the 8.5 per cent interest that it was otherwise able to pay from its annual incomes.

This year, the company's reserves did not permit any such move. The Finance Ministry too refused to provide support.

This year too, the trade unions had demanded 9.5 per cent, but the organisations' earnings did not permit this and the Government too refused support.

The President of the Indian National Trade Union Congress, Mr Sanjeeva Reddy, who is a member of the CBT, after the meeting said that this had become an unending dispute every year. "We accept the 8.5-per cent interest but will urge the Prime Minister to intervene again as he did last year to raise the rate," he said.

Mr Reddy said the Government's intervention last year had depleted the EPFO's reserves. "So this time too, the Government should intervene and arrange for funds," he said.

Mr D.L. Sachdev, the representative of the All India Trade Union Congress in the CBT, said, "We are not satisfied with 8.5 and are looking at it as an interim. Despite insisting, the Labour Minister did not commit it as interim. But we will take up the issue with the Prime Minister and continue to struggle for 9.5 per cent. We think raising the rate on Special Depository Fund is the only solution for this," Mr Sachdev said.

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(This article was published in the Business Line print edition dated December 8, 2005)
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