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Ministry for raising PF interest

Special Correspondent

NEW DELHI: Union Minister of State for Labour and Employment (Independent charge) Oscar Fernandes said on Wednesday that he was in favour of raising the interest on Employees Provident Fund (EPF) deposits for 2008-09 in view of the increased lending rates.

Talking to reporters on the sidelines of a function here, Mr. Fernandes said he would shortly meet the Union Finance Minister in this connection. “We are meeting the Finance Minister for enhancing the interest rate on the Special Deposit Scheme (SDS). If the market rate is high, we can demand more and get it.”

The Minister, along with members of the Central Board of Trustees (CBT), is also planning to meet the Prime Minister to push for enhancing the returns on deposits.

Over 40 million Employees Provident Fund Organisation (EPFO) subscribers will stand to benefit if the interest rate is hiked. The rate fixed for 2007-08 is 8.5 per cent. The rate for the current financial year is yet to be announced. The Special Deposit Scheme (SDS) constitutes nearly 80 per cent of the PF investments.

Mr. Fernandes said the earning would have been more had the EPFO invested money in any other way than the SDS.

He ruled out the possibility of the EPFO money finding its way to the volatile equity market.

“The CBT members are not in favour of investing in equities, as there are sharp fluctuations in the market. There is an element of risk in investing in equity.”

Union Labour Secretary Sudha Pillai, said: “We have brought to the notice of the Finance Ministry that it [interest] is less compared to the market rate.”

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