The Hindu : National : Pre-budget meet: unions differ on EPF interest rate

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Sunday, Jun 06, 2004

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Pre-budget meet: unions differ on EPF interest rate

By Our Special Correspondent

Trade union leaders at the North Block office of the Finance Minister, P. Chidambaram, on Saturday for a pre-budget meeting. — Photo: Shanker Chakravarty

NEW DELHI, JUNE 5. Differences cropped up today among representatives of trade unions over the issue of interest rate payment on the Employees Provident Fund. The Left unions demanded that the rate be increased or retained at the current level of 9.5 per cent, while the Congress-backed union said the interest should be pegged to the rate of returns that the Fund earns on its investments.

The differences came to the fore at the pre-budget meeting called by the Union Finance Minister, P. Chidambaram, with the union representatives. The Communist Party of India MP and general secretary of the All-India Trade Union Congress (AITUC), Gurudas Dasgupta, urged the Minister not to further reduce the interest on EPF or bank deposits since it had been proved that interest rates were not the overriding factor influencing investment decisions.

The general secretary of the Centre for Indian Trade Unions (CITU), Chittabrata Majumdar, wanted the restoration of the 12 per cent interest on EPF, small savings, the General Provident Fund and the Public Provident Fund. However, Sanjeeva Reddy of the Congress-backed Indian National Trade Union Congress (INTUC) felt that the rate of interest on EPF should be on the basis of returns that the Fund earned from its investments. The current returns on investments are below 9.5 per cent.

The AITUC and CITU also wanted the income tax exemption limit to be raised to Rs. 1 lakh and the withdrawal of income tax on perquisites availed of by employees. At the same time, Mr. Dasgupta called for the broadening of the tax base and increasing the incidence of taxation, particularly on the corporate sector and high income-earning individuals. He also suggested an increase in the service tax rate, a tax on agricultural affluence and on private schools and private nursing homes. The AITUC also advocated an expenditure tax on ostentatious display of wealth at social functions such as marriages and a crackdown on black money generation and general corruption. Mr. Dasgupta also wanted the Government to take steps to restore gratuity payment to teachers in private schools which was recently struck down by courts.

The Bhartiya Mazdoor Sangh representative, Uday Rao Patwardhan, wanted the economic policies to conform to the interests of the masses, protect workers. He did not want any reduction in the retirement age for Government employees from 60 to 58 years.

The INTUC wanted foreign direct investment on the Chinese pattern. Mr. Reddy said the sick public sector undertakings should be handed over to workers' cooperatives in an attempt to revive them before being sold.

Umraomal Purohit of the Hind Mazdoor Sangh complained about the large-scale sale of land of sick public sector undertakings for real estate purposes. Even the land belonging to the Railways was being sold off, he said.

The representatives wanted the Government to go in for massive public investment which, in turn, would attract private investment and to concentrate on social infrastructure, revamping agriculture, expansion of elementary education and basic health care and restoration of the public distribution system.

Some of the other points made at the meeting include evolving of a national social security policy to provide relief to all sections of workers including those who were involuntarily unemployed. There was demand for reversal of the earlier Government's decision on replacing the existing defined pension scheme by a new contribution defined scheme and for making a budget provision to pay the statutory dues of workers in Central public sector undertakings amounting to Rs. 1,900 crores.

Mr. Dasgupta later told presspersons that the Minister assured them that some of the points raised by them would find a reflection in the coming budget. He said he had told Mr. Chidambaram that the trade unions were willing to function as responsible social partners in the development of the economy, provided they get a fair deal.

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