Photo By P. Virot

New Delhi: Left-leaning trade unions on Wednesday urged Prime Minister Manmohan Singh to hike the rate of return for the country's largest state-run pension fund scheme and demanded a restoration of the right to strike. 
Like India's investors, unions are keen to find out how Singh's new government will balance economic reforms with the demands of its communist supporters ahead of its first budget on July 8. 

"We plead for restoration of the 12 percent interest on the Employees Provident Fund, all small savings, general provident fund," the Centre of Indian Trade Unions (CITU) said in a memorandum to Singh. 

"We fervently appeal to the prime minister to initiate immediate action in this regard (right to strike) in line with assurance in the Common Minimum Programme (ruling coalition policies)." 

In August last year, the Supreme Court said government workers had no right to strike because it inconvenienced citizens and cost the state money. 

The Employees Provident Fund currently pays 9.0 percent and 50 basis points as bonus for the financial year 2003/2004. The board of trustees of the fund are yet to finalise the rate of return for the scheme for the year ending March 2005. 

India cut rates on government-administered small savings schemes -- popular with pensioners and workers for their high returns -- by 100 basis points last year in an effort to align them with interest rates on bank deposits. 

The higher small savings rates distort the overall rate structure, as banks have to compete with these schemes while attracting depositors, leading to higher lending rates. 

Savers in the administered schemes get up to 9.5 percent, while government securities pay between 4.5 percent and 6.0 percent, creating a distortion. 

CITU also asked Singh to abandon the privatisation of the country's two biggest airports at New Delhi and Bombay. 

The new government, led by Singh's Congress party, plans to continue the previous government's privatisation of the airports in a bid to improve them to global standards.