Amidst indications of retaining 8.5 per cent interest, the EPF board will meet here tomorrow to decide the rate for 2006-07 and 2007-08 for its four crore subscribers.
Tomorrow's meeting, after half a dozen such exercises failed to finalise the rate, assumes significance in the light of Labour Minister Oscar Fernandes' statement that the government will try to retain the present rate.
Thought EPF's earnings allow a maximum of 8.25 per cent interest, the Central Board of Trustees is likely to settle for 8.5 per cent interest with the Left-backed trade unions strongly objecting to any further cut.
As the rate could not be thrashed out in the past meetings, Fernandes said efforts would be made this time to evolve a consensus so that the EPF interest is not lowered.
The EPF Board at its last meeting on May 27 had decided to have a fresh look at the matter on July two but that meeting was later called off.
While Leftist trade unions are opposing any cut in the rate from the existing 8.5 per cent, Fernandes is of the view that for 2006-07, the rate of interest would depend on the fund available with the EPF while the higher rate of interest offered by commercial banks would be taken into account for future calculations.
Fernandes has deferred a decision on the EPF rate citing the assembly elections in Goa but, in course of informal interaction with the members of the audit panel, he had asked them to try their best to find out if some surplus amount is lying accumulated in the Interest Suspense Account, Contingency Reserve and Special Reserve Fund.
The Finance and Investment Committee of the EPF Board had observed that only eight per cent rate of interest was sustainable out of the income of the fund during 2006-07.
The Leftist trade unions have been suggesting that since some banks were at present giving upto 10.5 per cent interest, the EPF rates should be hiked accordingly and it was for the CBT to explore ways to do it.
But the CBT expressed helplessness in paying 8.5 per cent interest saying it would face a deficit of Rs 450 crore.
After examining the accounts and interest rate declarations of the past few years, EPF officials have identified a surplus of Rs 590.16 crore -- a sum that could allow the government to continue paying 8.5 per cent interest for both 2006-07 and 2007-08 fiscals.
Labour ministry sources said that the EPF board's decision would be conveyed to the government for consideration and clearance by the Finance Ministry before it is notified.
