IIF, 30th April, 2005 : Prof. J.D. Agarwal, Chairman, Indian Institute of Finance has welcomed the declaration of the Government of India to ratify the EPF rate at 9.5% for 2002-2004. The loss or deficit of about 927 crores is just too small a amount to provide social security to 4 crores people who are beneficiaries of EPF scheme. According to Prof. Agarwal in case the social security measure along the lines of western world is introduced in India, the liability of such social security scheme would run into several thousand crores with its mounting effect in subsequent years.

He also reiterated that Government should ratify the EPF interest rate at 9.5% for 2004-05.

Prof. Agarwal has been a strong supporter that EPF Interest rates should be maintained at a level at which employees have made the contributions during their life time without any indication in the past that such EPF rates may be reduced in future and therefore in their old age they have a right to enjoy the fruits of the earning of their savings.

However, Prof. Agarwal opined that Government in order to reduce its liabilities on EPF rate and earnings on EPF investment by introduction of a Dual System of Interest rates. All new contributions to EPF may earn a floating interest rate depending upon market conditions while all contributions made in the past may bear a fixed interest rate of 9.5 %. According to Dr. Agarwal this would also give the savers a judicious option either to invest in EPF or else where besides helping the government to reduce its liabilities on this front with breaching the trust.