The Finance Ministry is believed to have permitted the Labour Ministry to go ahead with 8.65 per cent interest rate on employees' provident fund (EPF) for FY 2016-17, which will benefit over 4 crore EPFO members, as per the media reports.
According to the EPFO estimates, the fund will see a surplus after providing 8.65 per cent interest rate for the last fiscal.
A reluctant Finance Ministry had been nudging the Labour Ministry to lower the EPF rate to below 8.65 per cent as approved by the EPFO trustees in December last year.
"The Finance Ministry in its recommendation to the Labour Ministry said it is up to the latter to decide on what interest rate should be given. However, it should be ensured that there should not be any deficit to the fund," according to a source, quoted PTI.
"The Finance Ministry had earlier suggested an EPF rate slightly lower than approved by the trustees as it wanted the interest to be aligned with the rates of small savings," added the source.
Labour Minister Bandaru Dattatreya has been maintaining that the EPFO subscribers would be provided 8.65 per cent rate of interest for 2016-17.
"The Central Board of Trustees (CBT) had decided to give 8.65 per cent. Our ministry keeps on discussing with the Finance Ministry. We would have surplus of Rs 158 crore on providing 8.65 per cent," Dattatreya had said earlier last week when asked whether the Finance Ministry is making a case for lowering the interest rate.
"If need be, I will talk to them (the Finance Ministry). I have requested them to approve 8.65 per cent. In any case this amount (interest income) will be given to workers," the minister had said.