Marxists see red in India’s old-age pension rate cut

New Delhi, January 11:

India’s powerful Marxists today attacked the government for slashing by one percentage point to 8.5 per cent the interest rate on the country’s benchmark old age savings scheme.

The reaction of the Marxists, the largest legislative ally of the Congress-led coalition government, came a day after New Delhi announced the rate cut in the Employees Provident Fund which will apply during the fiscal year ending on March 31.

The Fund which has 40 million subscribers is a scheme in which up to 12 per cent of their earnings are deducted from the payroll and put into the savings vehicle. The Communist of India-Marxist (CPM)) described the interest rate cut as ‘regrettable.’ “This will be a loss for millions of workers and employees who are members of the fund, a majority of whom are employed in small- and medium-sized industries. The fund is their only social security or old age benefit,” the CPM said in a statement.

The government said the 9.5 per cent return on savings was untenable because of falling bank interest rates in India. “At a time when the government is announcing eight per cent growth in the economy, it is regrettable that workers are geting their share reduced by the reduction of interest on the Employees Provident Fund,” the statement said.

The CPM demands that the government reconsider and the interest rate be retained at 9.5 per cent. Last April, India under pressure from its leftist partners hiked the interest rate to 9.5 retroactively for the 2002-03 and 2003-04 financial years but war-ned the move would leave the Fund with a deficit of $116.5 million.