The Central Board of Trustees had recommended an interest rate of 8.80%, 10 basis points higher.
The Finance and Labour ministries appeared to be locked in a fight on Monday, over the rate of interest on EPF deposits for 2015-16 with the former pegging it at 8.7%, 10 basis points lower than what was decided by the EPFO.
The Labour Ministry is now planning to seek a review of the Finance Ministry's decision after trade unions, including the RSS-backed Bharatiya Mazdoor Sangh attacked the lowering of the rate.
Labour Minister Bandaru Dattatreya told the Lok Sabha, "The (EPFO's apex decision-making body) CBT, at its meeting held in February 2016, had proposed an interim rate of interest at 8.8% to be credited to the accounts of EPF subscribers for 2015-16. The Finance Ministry has, however, ratified an interest rate of 8.7%." The top brass of the Labour Ministry, including Dattatreya, went into a huddle and discussed the issue for more than two hours.
Labour Ministry sources said the Ministry will seek review of the Finance Ministry's decision as EPFO has sufficient income in 2015-16 to pay higher returns.
It is probably for the first time that Finance Ministry has overruled the decision of retirement fund body EPFO's apex decision making Central Board of Trustees (CBT) headed by the Labour Minister.
Trade unions are of the unanimous view that this decision of the Finance Ministry is an encroachment on the autonomy of the Employees' Provident Fund Organisation (EPFO).
"BMS strongly condemns the cut in EPF interest rates and will hold demonstrations at EPF offices on April 27," BMS General Secretary Virjesh Upadhyay said, adding the Fund is managed by the CBT, an independent and autonomous body.
"The step taken by the Finance Ministry to over-rule the recommendation of the CBT is not acceptable. It is a wrong step and is an encroachment by the Finance Ministry in EPF's functioning," he said.
Echoing the view, Indian Trade Union Congress Vice President Ashok Singh said, "It is wrong. When the CBT agreed on 8.8%, who is Finance Minister Arun Jaitley to interfere in it."
"The government does not provide any monetary support to EPFO and it is the workers' money. Thus the government has no right to interfere in this. We will strongly protest it and it will also be an issue in the Bharat Bandh on September 2," he said.
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