New Delhi,  (IANS) In a major climbdown after persistent pressure from the trade unions and political parties, the government on Friday increased interest rate on employees provident fund (EPF) deposits to 8.8 percent for 2015-16 from 8.70 percent as it had announced earlier.

“I am happy to tell you that the EPF rate has been increased to 8.8 percent,” Labour Minister Bandaru Dattatreya told reporters here.

The provident fund rate was 8.75 percent in 2014-15 and the Central Board of Trustees (CBT) had recommended to make it 8.8 percent for this fiscal. However, the finance ministry had rejected the recommendation and had approved only 8.70 percent interest, citing lower earnings.

Most trade unions had protested the decision and the issue was also raised by political parties both in parliament and outside. Trade unionist and Communist Party of India-Marxist MP Tapan Kumar Sen had also raised it in the Rajya Sabha.

Trade unions had threatened to intensify agitation from September if the government did not comply with the demand of higher EPF interest rates.

“This protest from all central trade unions is to condemn such arrogant, anti-worker approach of the central government,” said a statement by All India Trade Union Congress (AITUC).

This is not the first u-turn the government has made in regard to the EPF.

On April 19, close on the heels of violent agitation in Bengaluru and also demand from trade unions, including from RSS-affiliated Bharatiya Mazdoor Sangh (BMS), the government had withdrawn its new rules of provident fund withdrawal.

According to the new norms proposed earlier this year, subscribers are not to be allowed to claim withdrawal of PF after attaining 54 years of age, and would have to wait till 57.

The earlier norms allowed contributors or subscribers to claim 90 percent of their accumulations in their PF account at the age of 54 years, and the final claims to be settled just one year before their retirement.