Interest rate on employees' provident fund will be increased to 8.6 per cent for the current fiscal, a move which will benefit around five crore subscribers.
"The rates were brought down due to lower income (on investment in Special Deposit Schemes)...There is no question of minimum or maximum interest rates. We distribute it as per our revenue. Next time, it will be 8.6 per cent," Labour Minister Mallikarjun Kharge said in the Rajya Sabha replying to a debate on working of Labour Ministry.
The Employees' Provident Fund Organisation (EPFO) had brought down the rate of interest to 8.25 per cent for 2011-12 from 9.5 per cent provided in 2010-11. The retirement fund body EPFO has parked in excess of Rs 55,000 crore in the Special Deposit Schemes (SDS) aimed at providing better returns to non-government provident funds and other such funds.
Kharge said the rate of interest on funds depend on the revenues. Since the money belongs to workers, the government does not intend to reap any benefit out of the fund and returns every penny for the welfare of the subscribers. "Even if the interest rate is less, the money is kept in safe custody," Kharge said.
The interest rate was lowered last fiscal on the finance ministry's recommendation that with the kind of returns, it was not possible to continue with the 9.5 per cent given in the year-ago period. Stating that his ministry is taking pro-active steps to address issues related to labour, Kharge said, the government has enacted laws to protect workers and provide them additional benefits like assured job, food and medicines.
On pending bills, he said, "Sometimes, we are not able to enact good laws because of differences. Without cooperation, no decision can be taken."