New Delhi: The salaried class, government employees in particular, were left complaining as the Employees Provident Fund Organisation (EPFO), the retirement fund body, lowered the interest rate on provident fund deposits for the current Financial Year to 8.55% from the existing 8.65%.
The decision to lower interest rates for fiscal year 2017-18 was taken at the meeting of the Central Board of Trustees of the EPFO on Wednesday. In the last fiscal, the EPFO had cut the interest rate to 8.65% from 8.8% in 2015-16.
The latest rate cut comes amid reports that the EPFO sold a portion of its investments in the exchange-traded funds (ETF) worth Rs 2886 crore earlier this month. That had given rise to hopes that the retirement body, which has some five crore members, will retain the interest rate.
Labour Minister Santosh Gangwar labelled difficult economic scenario as the reason for the rates to be brought down.
"It is difficult to evaluate about future in view of present economic scenario. We paid 8.65% last fiscal, which left a surplus of Rs 695 crore. This year, we have decided to recommend 8.55% for 2017-18, which will leave a surplus of Rs 586 crore," he said.
Finance Minister Arun Jaitley in his Budget 2018 speech announced that the government will contribute 12% of the wages to new employees under the Employees Provident Fund Organisation (EPFO) for the first three years.
"Government has decided to contribute 12 per cent of wages to new employees across all sectors in EPF," Jaitley said in his speech.
The decision on EPFO rate-cut has been slammed by the opposition. The Congress Party called it as an "organised fleecing" of ordinary citizens.
Congress spokesperson Randeep Surjewala said in a statement, "Modi Government backstabs honest tax payers by lowering interest rates of 4.5 crore EPF holders. Burning holes in the pockets of already burdened people has become the single point agenda - 'motto' of Modi government."