Nirmala Sitharaman defends EPFO's proposal of cutting interest rates, says it reflects 'today's realities'

"EPFO has a central board which is the one that takes the call on what rate has to be given for them, and they have not changed it for quite some time...they have changed it now ... to 8.1 percent," the Finance Minister said replying to a question.

New Delhi: Defending the Central Board of Trustees of Employees' Provident Fund Organization's proposal of reducing the interest rate to 8.1 percent on the employees' provident fund for 2021-22 from 8.5 percent in 2020-21, Union Finance Minister Nirmala Sitharaman on Monday said in Rajya Sabha that the proposal was dictated by realities of the current times. She also said that the EPFO's Central Board decides the interest rate on provident fund deposits and has proposed reducing the interest rate to 8.1 percent for the financial year of 2021-22.

"EPFO has a central board which is the one which takes the call on what rate has to be given for them, and they have not changed it for quite some time...they have changed it now ... to 8.1 percent," the Finance Minister said replying to a question. "The fact remains that the rates which are prevailing today, and it (EPFO interest rate) is still higher than the rest," she added. She said that the interest rate on provident fund deposits remained the same for 40 years adding that the latest changes reflect "today's realities".

As for the government seeking excess spending approval, the Minister said that the Union Government has borne the higher cost of urea without passing it on to farmers. She also stated that in the financial year of 2022-23 the devolution of the state share in central taxes is projected at Rs 8.17 lakh crore adding that the revised estimate of Rs 7.45 lakh crore for 2021-22 has already been already released.

Sitharaman said that Rs 5,000 crore is proposed for recapitalization of state insurance companies in the third batch of supplementary demands for grants. She alleged that during the UPA rule for 10 years there was nil defense procurement.

During the day, Rajya Sabha also returned a money bill moved by the Union Finance Minister authorizing the government for payment and appropriation of certain sums from the consolidated fund for the financial year 2021-22. Another Appropriation Bill for the expenditure done in the 2018-19 financial year was also returned by Rajya Sabha. Both the bills were passed by the Lok Sabha.

(With agency inputs)