Retirement fund manager Employees’ Provident Fund Organisation (EPFO) may raise interest rates from the current level of 8.55%, bringing cheer to millions of employees in the organized sector. If indeed EPFO does follow through, it will serve up another sop in poll-bound India, this time for the salaried employees. So far, farmers—through farm loan waivers—have been the beneficiaries, while the middle class has gained indirectly, with the recent reduction in goods and services tax (GST) rates on several consumer goods.
Though the annual internal review is yet to be concluded, three officials with knowledge of the development said there was a good chance the EPF rate would be hiked. At the least, it will be retained at the existing level; given the steep fall in inflation, the real rates of interest accruing to the salaried classes have spiked.
In 2017-18, EPF savings earned 8.55% interest, which was at a five-year low. However, in 2018-19, even an unchanged interest rate will make it one of the most rewarding savings schemes. In 2018, the average interest rate of the Public Provident Fund (PPF) and the National Savings Certificate (NSC) was 7.7%. The leading ultra short-term debt funds, which invest in securities with maturities between three and six months, returned an average of 7.78%,