The Employees’ Provident Fund Organisation (EPFO) is probably going to credit the interest rate for FY21 right before Diwali, according to a report by Hindustan Times. This is apparently being done in an attempt to bring some cheer to the people ahead of the festive season. This revelation will come hand-in-hand with the government employees and pensioners getting their dearness allowances (DA) and dearness relief (DR) hikes in recent months. This came from two government officials who informed HT about the new change but did not wish to be named.
This would certainly bring some holiday joy in a time when it is so desperately needed. It will directly impact the salaried class, which has faced tremendous hurdles trying to stay afloat in the wake of the pandemic. The EPFO’s central board has apparently approved the interest rate hikes according to the report by HT. Additionally, the retirement fund manager has sought out the final green light from the finance ministry and is expected to get the go-ahead soon, according to one of the unnamed officials who informed HT.
One of these unnamed officials said that the finance ministry’s approval for an 8.5 per cent interest rate for 2020-21 is going to go ahead soon. They also emphasised that all the factors were taken into consideration before agreeing on that 8.5 per cent rate and that the fund manager is well placed with that number.
As early as March of this year, the board had recommended around 8.5 per cent payout for FY21. Accordingly, the EPFO had apparently come down to an income of around Rs 70,300 crore in the previous fiscal. This included around Rs 4,000 crore from selling a portion of its equity investment, the report said.
The interest rate, that has been recommended and which will likely be approved, came as a result of the income from the interest received from debt investment and income that was realised from equity investments, according to a statement made by the entity after its central board meeting, said the report.
In the last few months the government has been hiking up the rates of central government employees’ DA and DR. This comes after a period of stalled rates and suspended DA after the pandemic hit in 2020. These hikes have brought up the rates past the previously anticipated 31 per cent. The government announced recently that it was allowing its employees to collect back their Child Education Allowance (CEA).
With the addition of these funds to the already incoming hikes, government employees will see a nice payout ahead of the festive season and by the end of this year. It should also be noted that the state governments had taken to this trend and also hiked their interest rates for DA to 28 per cent. There was a total of seven states that hiked it recently. These states were Uttar Pradesh, Jammu and Kashmir, Jharkhand, Haryana, Karnataka, Rajasthan and the most recent entrant to that list, Assam.
Previously the DA was sitting at just 17 per cent, but after the hike by the government, the DA was taken up to 28 per cent, which took effect from July. There was also another hike in DA by 3 per cent, recently. This left the DA standing at 31 per cent, along with the possible increase of salaries. As a result of all these hikes, around 65 lakh pensioners and 48 lakh central government employees would benefit from it. Going forward into the festive season, that number might grow to another level.
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