Central Government Allows 5% of PF Funds to be Invested in Share Market
The Central Government has allowed investing up to 5% of the Provident Fund capital in the stock market. As a result, Rs.5000 crore is expected to be released for investment this financial year. A circular from the Ministry of Labour has confirmed that 5% of the PF amount has been sanctioned for investing in the stock market.
The money will be invested in stock market based EDFs. Mr. Shankar Agarwal, the Secretary of Departmetn of Labour, said that announcements to this regard were made about two or three days ago. Rs.80,000 Crore was the total amount collected in the EPF in the financial year 2014-15. The amount is expected to cross Rs.1 lakh crore before the end of the current Financial Year. The number of persons qualified for EPF, and the amount raised, have increased after the salary limit was raised from Rs.6500 to Rs.15,000.
Agarwal has said that initially only 1% of the EPF reserve was going to be used for investments. This is going to be raised to 5% before the end of the financial year. The Ministry of Finance has suggested that between 5 to 15% of the funds can be invested in the markets. Agarwal added that since it was the first time, they are going to be very cautious and invest only 1% of the funds.
“The money is the sweat and blood of workers. We don’t want to carelessly invest it in the stock market. Hence, we have planned to invest only 5% of the money in the first stage,” he clarified.
He said that the plans are to invest only in EDFs. He added that no decision has been made about percentage of investment aimed at public sector companies. In the past, EPF, which has about 6 crore members, has been investing only in Central Government bonds.
Source: CG Staff News