The special package for the textile and garment sector unveiled by the Modi government in June last year — and hailed by many including chief economic adviser Arvind Subramanian as a potent tool for creation of decent jobs — hasn’t been a runaway success, going by the fresh enrolments from the sector under the employees provident fund (EPF) scheme. While a crucial component of the package was an undertaking that the government will bear the entire 12% employer’s contribution to the retirement fund for the first three years — against 8.33% for other sectors under the Pradhan Mantri Rozgar Protsahan Yojana — just 1,075 new workers have enrolled under the scheme in the last eight months.
The scheme’s objective was very ambitious: To achieve a cumulative increase of $30 billion in export of textiles and garments and R74,000 crore investments in the employment-intensive sector over three years.
A senior labour ministry official said that the numbers (of new employers enrolled under the bolstered EPF scheme) might have been better had the scheme been launched in June itself. But that was not to be. “The scheme, approved by the Cabinet in June, got other necessary clearances only in August. EPFO had to ready the software and enrolment started from October and, finally, in December, direct credit to the scheme by the government started,” the official said.
The software was also such that even a slight incompatibility between the credentials of the employee, as provided by employer, and her Aadhaar card details would automatically reject the enrolment, the official said. “The ministry has now asked the UIDAI (Unique Identification Authority of India) to enrol new employees whose credentials match up to 80% as provided by the employers,” he said, adding, “A lot of cases are under examination now.”
The package for the sector included making EPF optional for employees earning less than Rs 15,000 per month. The idea was to ensure there is more cash in the hands of such workers. Sources said even this has come a cropper since the proposal needs an amendment to the EPF Act and even the process for the same has not started yet. For the proposal to take effect, the EPFO needs approval of its highest decision-making body, the Central Board of Trustees (CBT), to be followed by the Cabinet’s approval and vetting by the law department before it could be tabled in Parliament. Sources said the retirement fund body might take the proposal to the CBT in its next meeting.
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Many trade unions are, however, not happy with the proposal, as they think that it would deprive the workers of even a modicum of social security. The labour ministry has already had a round of meeting with the unions’ representatives in this regard and the unions are learnt to have opposed the idea “tooth and nail”.
The package for the textile-and-garment sector, which policymakers want to be extended to other employment-intensive sectors like leather and footwear, included introduction of fixed-term employment (in line with the seasonal nature of he industry), additional interest subsidy incentives under the technology upgradation fund scheme and enhanced duty drawback coverage for exports.