'8.5% EPF rate not sustainable'
The EPF Organisation says it is finding difficult to sustain interest rate of 8.5% without government support.india Updated: Sep 27, 2006 19:24 IST
Reeling under a severe resource crunch, the Employees Provident Fund Organisation on Wednesday said it would be difficult to sustain the current interest rate of 8.5 per cent to its four crore subscribers without government support.
"We have almost exhausted our reserves and continuing with the existing interest rate will lead to deficit," Central Provident Fund Commissioner A Vishwanathan told PTI.
Presently, there is a reserve of Rs 55 crore and that too is meant for special purposes, he said.
Given the current earnings and anticipated expenditure, it is not affordable to pay such interest rate, he said.
He, however, said that if the Central Board of Trustees, (CBT) which fixes the interest rate, decides in favour of 8.5 per cent interest rate and the government gives compensation, there is no harm in continuing with the existing rate.
EPF rate was slashed to 8.5 per cent for 2005-06 from 9.5 per cent earlier.
On account of 8.5 per cent, the deficit amounted to around Rs 365 crore, which was met from its own resources.
Consequent upon the government notification, the total payout was estimated to be Rs 6,889.04 crore as interest to its four crore subscribers for 2005-06 against its projected interest income of Rs 6,523.15 crore.
EPFO had a corpus of Rs 72,000 crore till March 2004, which grew to Rs 79,000 crore by March 2005.