The government has decided to shelve the plan of raising the monthly wage ceiling for mandatory EPF cover to Rs 21,000.Reuters

The salaried class is likely to get a cheer from the Employees' Provident Fund Organization (EPFO) as the retirement fund manager may raise interest rates from the current level of 8.55 per cent. In a poll-bound country, a hiked rate in the EPFO could add up to the slew of the decision taken by the governments to lure the voters.

In recent times, farmers have been the beneficiaries thorough loan waivers meanwhile a jump in the interest rate could be beneficial to the middle class which has indirectly been benefitted through a reduction in the goods and services tax rates on several consumer goods.

According to Hindustan Times, there is a fair chance that the rate would be hiked. With the steep slump in the inflation levels and increase in the real rates of interest accruing to the salaried classes, the EPFO interest rates would be retained.

Irking many in the year 2017-18, the government had slashed the EPF rates to 8.55 per cent which was five-year low. However, in current fiscal even if the center decides against any correction in the rates, the EPFO will still remain one of the most rewarding savings schemes.

Notably, last year, the average interest rate of the Public Provident Fund and the National Savings Certificate stood at a level of 7.7 per cent. However, the leading ultra-short term debt funds, which invest in securities and has a maturity period between three and six months gave an average return of 7.78 per cent.

One of the people aware of the development said that "2018 has been a relatively low-yielding year for debt investments, but the EPFO is unlikely to revise the interest rate downward for 2018-19 from what it paid last fiscal. It's an important year and we are making the last round of calculations before announcing the EPF rate in late January."

The retirement body had Rs. 600 crore in surplus last year when it offered 8.55 per cent interest on the investment. Presently, EPFO has invested around Rs 50,000 crore in the stock market through exchange-traded funds. The final decision will be taken after the EPFO central board scheduled towards the end of this month.