In one of the sharpest-ever interest rate cuts, the Employees Provident Fund Organization has slashed the returns on statutory savings to 8.25% for the current fiscal from 9.5% last year, on cues from finance minister Pranab Mukherjee. A notification on the reduction in rates for the 4.72 crore EPFO subscribers was issued earlier this week. In the present structure, the returns will be lower than the 8.6% paid for public provident fund (PPF) deposits, a popular voluntary savings scheme. Banks, too, are offering 9%- 9.5% deposits that are of much shorter duration. But compared to banks, the returns on EPF are better since the annual contribution and the interest on the balance are tax free. The EPFO’s investment committee had said that even at 8.25%, there would be a deficit of Rs 24 lakh. The labour ministry had suggested a payment of 8.6%, in line with the PPF returns, while asking the finance ministry to take the final call. It was for the first time that North Block was asked to decide instead of the usual practice of the finance ministry notifying the rate suggested by EPFO.