More than 40 million pension holders will earn less as India’s provident fund body EPFO lowered on Monday its interest rates on deposits from 8.8% to 8.65% in this financial year.
This is the lowest rate of interest on provident in the last seven years and may have come to stave off losses in the Employees’ Provident Fund Organisation (EPFO).
The move comes close on the heels of lowering the interest rates by 0.1% in small savings scheme, a move that triggered political protests.
The Congress dubbed it as a part of the “second surgical strike” and said innocent people will be again hurt after already being hit by the government’s shock recall of Rs 1000 and Rs 500 notes last month.
“There are 4 crore active EPF accounts and altogether 9 crore EPFO workers. These people after being hit by ‘notebandi’ (demonetisation) has now been assaulted again by lowering their income,” Congress chief spokesperson Randeep Surjewala said.
Union Labour Minister Bandaru Dattatreya, however, defended the decision and said that 8.65% “is the best rate that can be fixed in the present economic scenario.”
Pointing out that inflation is on decline, Dattatreya said, “This proves that Narendra Modi-led government has kept the interest rates in front of its workers in clear manner.”
Trade unions claimed they opposed the lowering of rates in the meeting of the Employees’ Provident Fund Organisation’s central board of Trustees. “This goes against workers’ interests. It will have a disastrous effect,” Left-affiliated AITUC general secretary Gurudas Dasgupta told HT.
In the meeting, trade union representatives were told the EPFO will face a deficit of Rs 383 crore if last year’s rate was retained. The income of EPFO was projected at Rs 39,084 crore for this financial year.