The Union government doubled on Thursday the limit on money from provident fund that can be invested in stock, bond and commodities markets, defying labour unions that say such investments are more prone to risks.
The labour ministry said the doubling of the 5% ceiling on investments in exchange-traded funds (ETF) will ensure higher returns for PF account holders.
The move bypassed the central board of trustees of the Employees’ Provident Fund Organisation that usually takes decisions on the provident fund corpus which gives financial security to millions of working Indians who contribute to it.
“We decided to raise it... keeping the good economic situation, ground conditions and how social security funds invest globally. We are custodians of workers money and our responsibility is to see they get good returns,” labour minister Bandaru Dattatreya said at a press conference.
EPFO has already invested Rs 1,500 crore in ETFs in the first half of the current fiscal and will invest about Rs 500 crore in the remaining six months.
On if the labour ministry sought the EPFO trustees’ approval, Dattatreya said: “The issue was discussed twice in the CBT meeting. Some members had reservations against the ETF investments.”
Representatives from some trade unions slammed the “unilateral” decision.
All India Trade Union Congress leader DL Sachdev told PTI: “We strongly oppose this unilateral notification by the government to double FPO investments in ETFs despite our reservations. We will would soon discuss the issue with other unions and launch a protest against this move.”
Indian Trade Union Congress vice-president Ashok Singh said, “This is not the right approach. What was the emergency to do it and if it is done then what is the sanctity of the central board of trustees headed by labour minister which is the apex decision making body for the EPFO.”.