Provident fund interest may rise further, says minister
17 May 2011
With the government having announced a hike in interest rates on Employees' Provident Fund savings, union labour minister Mallikarjun Kharge announced on Monday that the government would look at hiking the interest rate further in 2011-12.
''We are contemplating further increasing the interest rate on Provident Fund from the present 9.5 per cent. This time also we want to give more to the employees. We are working towards it,'' he said in Bangalore.
The minister's comments have surprised many observers, as the EPFO had earlier attributed the recently-approved 9.5 per cent rate as a one-off hike made possible due to the 'discovery' of a surplus of Rs1,731 crore in the government-run fund's suspense account.
The current average yield from EPF investments is estimated to be around 8.3 per cent, with public sector securities yielding the highest return.
The finance ministry had earlier dragged its feet on the 9.5 per cent rate, pointing out that the surplus shown by the Employees' Provident Fund Organisation (EPFO) on the basis of which it wanted to pay a higher rate was not ''real''.
The Comptroller and Auditor General too has called the EPFO's surplus ''unverifiable'', and blamed ''non-updation'' of members' accounts for this.
The rate was nonetheless hiked as part of a slew of sweetener measures before the Assembly polls in four states, including Bengal.
Any further increase looks unlikely, unless the government once again puts political considerations ahead of basic economics, say commentators.
