NEW DELHI (CU)_The Finance Ministry of India gave the green light for the interest rate proposed by the Employees’ Provident Fund Organisation (EPFO) for provident fund deposit for the 2020-21 fiscal year. Over the past few years, the minister has questioned the higher returns declared by the organisation year after year, when much lower interest rates are offered for other government schemes such as the public provident fund and small saving schemes.
Nevertheless, late last week, Labour secretary Sunil Barthwal confirmed that the government agency has given its go ahead to an interest rate of 8.5 per cent, a move which is expected to bring some cheer ahead of India’s festive season. “Approval was received from the finance ministry today. It will be notified as soon as possible,” he told the Economic Times.
In March this year, the EPFO’s central board of trustees approved the aforementioned rate for the 2020-21 fiscal year, but the Labour Ministry is required to seek the approval of the Finance Ministry on the proposed rate before the EPFO credits the returns to the accounts of over 60 million beneficiaries. With an interest rates of 8.5 per cent, the EPFO will now be left with a surplus of ₹3 billion (US$ 40.29 million), a sharp decline from the previous financial year, when this figure was at ₹10 billion.
Every year, the EPFO invests 15 per cent of its annual accruals in equity while the rest is invested in debt instruments. However, since the beginning of the COVID outbreak in early-2020, millions of salaries workers have been withdrawing from their retirement fund kitty under the pandemic withdrawal scheme after they were made redundant or forced to work on reduced wages amid the global health crisis.
