EPF interest rate likely to remain untouched at 9.5 pc

‘‘The rate would be kept unchanged to send the message that the Government will stick by its pro-farmer, pro-labour objective,’’ the sources said.

The Government would also set up an experts’ panel to suggest money management techniques for ploughing the EPF money into non-risky investments which would yield better returns for the Fund.

As of now, the EPFO invests its money in low-interest earning, non-risky Central or state government scurities or special deposit schemes. It also lends money to public sector financial institutions.

‘‘The traditional system of money managment does not provide better investment avenues. This needs a relook and an experts’ group would be formed to recommend the alternatives,’’ the sources said.

Unions have been demanding that the interest rates be raised to 12 per cent, as existed in 2000. But the Labour Ministry warned the Finance Ministry that this would leave the EPF deep in the red, requiring a bailout package of over Rs 2,000 crore.

Gurudas Dasgupta of All India Trade Union Congress told The Indian Express: ‘‘We want the interest rate to be 12 per cent. If the Government cannot do that, then it should not be less than 9.5 per cent. We don’t want interest rates to be decided by market forces.’’

Girish Awasthi of the Bharatiya Mazdoor Sangh echoes the 12 per cent demand but admits that even 9.5-per cent interest rate is not sustainable: ‘‘It’s for the Government to decide the rate…Yeh to sarkar ka kaam hai ki woh rasta nikale.’’

Varadarajan of the Centre of Indian Trade Unions (CITU) agrees: ‘‘Even 9-9.5 per cent interest rate is not sustainable on the present yield. We want EPF rates hiked to 12 per cent and the SDS to give a real rate of interest at 6 per cent, indexed to inflation.’’