The Employees’ Provident Fund Organisation (EPFO) hiked on Tuesday the interest rate on provident fund from 8.75% to 8.8% for 2015-16, while reducing the returns on short-term small savings instruments by 0.25%.
Union labour minister Bandaru Dattatreya said the PF measure was an interim hike, open to revision.
“Looking at the situation, we are declaring a 8.8% hike for the workers,” he told reporters after chairing a meeting of the EPFO’s central board of trustees in Chennai.
He said the hike underlined the Centre’s commitment to the working class.
But trade unions were upset with the token 0.05% increase in the interest rate on provident fund that constitutes a key component of savings for millions of workers in India.
The EPFO’s financial audit and investment committee raised hopes in January, saying its earnings in 2015-16 were good enough to offer an interest rate of 8.95%.
“Papers presented by the EPFO say 8.95% interest rate was feasible. But it was not done. All the central trade unions have registered their protest,” said DL Sachdeva, the national secretary of the All India Trade Union Congress and a member of the EPFO’s central board of trustees.
Projections reveal that the EPFO will earn more than Rs 34,844 crore in 2015-16, meaning it will have sufficient funds to offer an interest rate of 8.95%.
Provident fund interest is directly related to the EPFO’s annual income from investments.