Should Employees provident fund be allowed to invest in capital market?

The earning potential is substantially higher if invested in stock market with only rider of efficient and effective mechanism for accountability of the fund manager and at the same time vesting of necessary authority in  him to take timely and effective decisions of course within the broader framework and guidelines. The guard also has to provided for collusive transactions!

Yes, but with some riders, assuming that the aam-aadmi is having a risk appetite of 5% of his PF.  The govt machinery/bureaucrats make moves only if they get some incentives for there "regular work".  They are least worried about the aam-aadmi & his hard earned money.   The investment/portfolio manager must be taking a joint ownership for incurred profits and losses as well.  He should be allowed to do investments with stop loss which must be equal to his future 3-5 years salary+ PF. The review period must be defined.  The profit/loss must be shared on this/predefined rates/basis.  This shall help bureaucrat to achieve there extra income and will help aam-aadmi to earn bit extra on there lifetime savings.  Of course extreme conditions for profit/loss should be well formulated and considered.  The idea can be refined further.

EPF money can be invested in equities after taking approval from EPF members and before investing in equities EPF trusties have to disclose the method of distributing the returns from the equities.

A country needs capital formation which primarily comes from savings.    This savings  should get invested for further wealth creation activities and productive purposes.   The corpurs available in the EPF invested with pure intent of wealth creation in the market equities would have multiple benefits:  boost the economy, create more employment opportunities, uplift the standard of living, and many such other.   If we have a well regulated market, controlled effectively and prudently by the powers that be, no inhibition be harboured.   It is a good step; a step in the right direction. 

Yes i believe that the EPFO must be allowed to invest in the capital markets upto 5%..

In developed countries the PF and the Pention funds invests heavily into the capital markets, so 5% in Indian Markets is ok.

Also i look it the other way, as 5% of corpus will be around 10-15 lack crores, if these funds are invested in our markets then this will help to stabilize the markets and also then with LIC, EPFO, Private Insurance Companies, AMCs, FIs, we will have healthy domestic investors and in long run the impact of the FII can be neuteralised...

in my opinion..while filling EPF form there should be an option that which percentage of money employee wanna invest in different funds, govt. sec etc . If an employee wanna take high risk and high returns then equity is best. if he wanna balanced investment then 50-50 ratio in equity and govt sec and so on....

Switching of funds option is also required for the employee , if he wanna change in risk factor.