For Finance Minister Arun Jaitley, the Employee Provident Fund (EPF) seems to have become a fetish—and for the Narendra Modi government a source of embarrassment. In the third rollback in two months, the government on Friday increased the EPF interest rate to 8.8 per cent from 8.7 per cent.
In its recommendations, the Central Board of Trustees (CBT) had preferred 8.8 per cent, but Jaitley’s ministry revised it 10 basis points lower. The idea was to tally this rate with interest rates in the economy. However, trade unions, including the RSS-linked BMS, opposed the downward revision and threatened nationwide protests. The government chickened out and hence the hike.
In Budget 2016-17, Jaitley had proposed the taxation of part of retirement fund, which he had to take back in the wake of the massive outrage against the proposal. Then the government tried to increase the age for the withdrawal of pension fund—and had to backtrack.