Despite Prime Minister Manmohan Singh’s exhortations to Labour Minister Oscar Fernandes to get the Employees’ Provident Fund Organisation Board to clear five per cent investment into equities before discussing the EPF rate for the year, the Labour Ministry seems to be in a state of denial, maybe because it has to directly deal with the employee unions that have been opposing equity investments while demanding a higher PF rate.

Not only was the equity investment issue sidetracked during the board meeting on November 7 (a day after Fernandes met the PM and Finance Minister P Chidambaram), the Labour Ministry didn’t even take note of the Finance Ministry’s views on the EPF interest rate and the proposal to introduce equity investments into EPFO, while drafting the board meeting’s minutes.

The PM as well as Chidambaram had made it clear to Fernandes before the board meeting that the rate should not be more than what the EPFO can afford and should be pegged at eight per cent in line with this year’s income. In fact, the PM had asked Fernandes to ensure that the long-pending proposal to invest five per cent of the EPF monies into equities gets cleared before discussing the PF rate.

Surprisingly, the minutes of the meeting circulated later by the Labour Ministry didn’t include the views of a senior Finance Ministry official present. Perturbed, the Department of Economic Affairs has recently shot off a letter to Labour Ministry officials asking for their views to be incorporated in the final minutes.

... contd.