New Delhi: The union government has approved an increase in the interest rate on 'employees provident fund' (EPF) to 9.5 per cent, up from the 8.5 per cent for 2004-05 with retrospective effect from 2002-03. This will increase the government's deficit to Rs927 crore.

Finance minister P Chidambaram announced the increase after a meeting with the prime minister. This is one per cent higher than the interim rate of 8.5 per cent announced by the then labour minister, Sis Ram Ola in August 2004.