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The United Progressive Alliance is considering the possibility of increasing the rate of interest on Provident Fund to 9.5 per cent.
Labour Minister Sis Ram Ola said, "The 8.5 per cent rate of return for provident fund announced sometime back being an ad hoc decision, there is a possibility of a revision upwards to 9.5 per cent."
The government may provide an increased 9.5 per cent return on provident funds if the position of the funds permit such a rate by the end of the year.
It was trying to provide the higher rate but that would depend on the availability of surplus by 2005 end.
Ola said that at 8.5 per cent, as much as Rs 206 crore (Rs 2.06 billion) had to be provided from the fund. "Hence the decision on an increased rate would hinge on availability of surplus with the fund," Ola explained.
"If there were no surplus funds with the PFs, employees would have to be satisfied with the current 8.5 per cent declared," he clarified.
Ola was speaking to reporters at the sidelines of a national conference on Strategies to Leverage Employment Generation: Unleashing Sectoral Potential, organised by the Federation of Indian Chambers of Commerce & Industry, the International Labour Organisation and the All India Organisation of Employers.
State labour Minister MD Amin, who was also present at the conference, however came down heavily on industries saying that there were a large number of instances where employees have not been paid provident funds dues, pension, gratuity and bonus.
While the industry on one hand does not abide by the rules and at the same time has been asking for liberal labour laws.
The minister said that the state government did not agree with the industries' view that labour law was stringent for there would not have been cases of default by employees.