NATIONAL

EPFO to meet today on interest rate



Special Correspondent

Trade unions oppose any reduction in the rate offered to subscribers

Meeting expected to witness some fireworksBoard feels 8 per cent matched with the estimated earnings for 2006-07

NEW DELHI: The crucial meeting of the Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation (EPFO) scheduled for Thursday will decide on the rate of interest rate for 2006-07.

The meeting is expected to witness some fireworks as there are indications that the Board favoured a reduction in the rate while trade union representatives are opposed to it.

The Board, at its last meeting held on November 7, had put off a decision on the interest rate as it had not calculated the surplus funds available.

After taking into account the details of income and funds, the Board had decided to re-examine and find out if any distributable surplus was available for giving interest.

Based on the calculations made by A.Venkataram, vice-president of the Bharatiya Mazdoor Sangh, the figures of the Finance and Investment Committee of the CBT and the audited accounts for 2005-06, the Board feels that the 8 per cent rate matched with the estimated earnings for 2006-07.

Since Mr. Venkataram had claimed in the last meeting that there were enough funds to give a higher rate to the subscribers, the Board also considered his calculations and realised that as far as estimated earnings for 2006-07 are concerned, the figures given by him and the EPFO tallied.

While the EPFO has given a figure of Rs.7,554 crore, Mr. Venkataram's figure stood at Rs. 7,526 crore and the figure given to the Finance and Investment Committee was Rs. 7,373 crore.

Quantum of subscribers

However, the difference is in the quantum of total subscribers' balance as on March 31, 2006 on which interest liability has to be worked out.

This, according to the calculation of the EPFO is Rs. 94,216 crore. Mr. Venkataram puts the figure at Rs. 85,751 crore and again, according to him, the figures given to the Finance and Audit Committee is Rs. 92,030 crore.

As per his figure, there is a deficit of Rs. 191 crore only when interest rate is decided at 9 per cent but taking the rates of 8 and 8.5 per cent, the EPFO is left with some surplus.

Calculations

According to the EPFO calculations based on Rs. 92,030 crore and rate of interest at 8.5 per cent, there will be a deficit of Rs. 449 crore. If on the same figure, the rate is calculated at 9 per cent, the deficit will be Rs. 909 crore.

As per the EPFO, on the basis of audited accounts for 2005-06, with the figure of Rs. 94,216 crore and interest rate of 8.5 per cent, the deficit would be Rs. 454 crore, and at 9 per cent it would be Rs. 925 crore.