NEW DELHI: Giving in to pressure from trade unions, the finance ministry has agreed to increase interest rate on provident funddeposits to 8.8 per cent from the 8.7 per cent decided by it earlier.
The rollback comes after the Finance Ministry and the Labour Ministry were locked in an intense tussle over the rate of interest on EPFdeposits for 2015-16 with the former pegging the rate at 8.7 per cent, 10 basis points lower than decided by the EPFO.
The Labour Ministry sought a review of the Finance Ministry’s decision after trade unions, including the RSS-backed Bharatiya Mazdoor Sangh attacked the lowering of the rate.
Finance Ministry had defended its decision to pay 8.7 per cent interest on EPF saying last year’s surplus would have to be used to pay this rate.
Opposing the lowering of interest rate, as many as 10 central trade unions decided to hold a day-long protest against the Finance Ministry’s decision. A Finance Ministry source said the earlier decision was based on “pure arithmetic calculation” and is aimed at ensuring sustainability of the EPFO and providing “stable returns” to its members in falling interest rate scenario.