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EPF sops for new jobs may stay in FY23

The rising unemployment rate, which stood at four-month high of 7.91% in December, according to CMIE, is also adding to the optimism.

In its pre-Budget meeting, industry association CII has urged the finance minister to extend the scheme to further boost employment. (File)
In its pre-Budget meeting, industry association CII has urged the finance minister to extend the scheme to further boost employment. (File)

Given the high rate of unemployment and the continuing need to spur job creation, the government is likely to extend by a year the tenure of the Aatmanirbhar Bharat Rojgar Yojana (ABRY), a provident fund subsidy scheme, aimed at incentivising new recruitment by businesses. An announcement in this regard is likely in the forthcoming Budget for 2022-23.

Aiming to reduce the financial burden of the employers and encourage them to hire more workers, the government, under ABRY, provides subsidy for two years in respect of new employees recruited on or after October 1, 2020. This is in the form of contributing both the employees’ and employers’ shares of 12% of basic pay each towards Employees’ Provident Fund (EPF) for employers earning up to Rs 15,000 per month in firms employing up to 1,000 people.

Also, the government pays employees’ 12% share of EPF contribution in respect of new employees in establishments employing more than 1,000 employees for two years. To avail the scheme, the beneficiary employee must not have been working in any establishment registered with EPFO before October 1, 2020; she also should not have a universal account number or EPF account prior to that date.

First announced as part of the Atmanirbhar Bharat Package 3.0 on November 12, 2020, the terminal date for registration of beneficiaries under the scheme has already been extended once from June 30, 2021 to March 31, 2022, primarily because the scheme failed to produced the desired results.

While giving the extension, the Cabinet revised upward the estimated number of new formal employment generation under the scheme to 71.8 lakh against the initial projection of 58.5 lakh. However, the scheme outlay was pruned to Rs 22,098 crore from Rs 22,810 crore for the entire scheme period.

However, as on January 6 this year, benefit under the scheme has been provided to 43.21 lakh beneficiaries through 1.22 lakh establishments and government’s outgo remained just a little over Rs 3,000 crore. The low utilisation of the projected outlay under the scheme is giving hopes to the employers that the terminal date for registration under the scheme might get extended in the Budget. The rising unemployment rate, which stood at four-month high of 7.91% in December, according to the Centre for Monitoring Indian Economy (CMIE), is also adding to the optimism.

In its pre-Budget meeting, industry association CII has urged the finance minister to extend the scheme to further boost employment.

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