The Left Front has asked for a reconstitution of the Central Board of Trustees of the Employees Provident Fund Organisation, to ensure that it is able to maintain the interest rate for its depositors at 9 per cent.
At present, the seats for the two Left trade unions, All India Trade Union Congress and Centre of Indian Trade Unions, on the Central Board of Trustees are vacant.
However, apart from filling up the two posts, the Left parties also want a fresh panel of names to be recommended for the other positions in the CBT, before calling for its meeting to decide on the rates.
The investment managers of EPFO and its banker, the State Bank of India, have indicated it will be impossible for the fund to offer an annual interest at more than 8 per cent for 2004-05.
This follows the scrapping of the high yield Special Deposit Schemes by the Centre, in which the fund had parked almost 80 per cent of its corpus of Rs 1,40,000 crore (Rs 1,400 billion). The EPFO is finalising the recommendations of its finance and investment committee to place before the CBT soon.
In 2003-04, EPFO offered a 9.5 per cent rate of interest to its 3.4 crore 34 million) contributors, who are employees of different private sector organisations.
The rate is the highest offered on any savings instruments in the country. The rates for small savings instruments are pegged at around 8 per cent.
Former Labour Minister Sahib Singh Verma had brought the rate down to 9 per cent for the last fiscal, but added a 0.5 per cent golden jubilee bonus, effectively keeping the rates unchanged.
To do that, he had to dip into the suspense account of EPFO, which financial experts say was a very short-sighted step. The finance ministry, which is also represented on the board, had refused to endorse the decision.
The Left parties say while a rate cut can be considered for 2005-06, any rollback now will be interpreted by the electorate as a repeat of the same policies that had been pursued by the erstwhile National Democratic Alliance government.
The parties are also working with the finance ministry to offer some sort of mechanism to shore up the rates in the current fiscal.
Under the EPF and Miscellaneous Provisions Act, 1952, the organisation is run by a 43-member board. The chairman's post is held by the labour minister.
Other than a vice chairman and the Central Provident Fund Commissioner, five officials are appointed by the central government, 15 by the state governments, and ten each are elected from among the employees and employers of the different organisations which are members of the EPFO.
