Formal sector jobs: Outlay for incentive scheme slashed

By: |
February 04, 2021 12:45 AM

While approving the scheme, the Cabinet had, on December 9, scaled down the estimated outlay for ABRY to Rs 1,584 crore for 2020-21. The scheme's outlay for 2021-22 is Rs 3,130 crore, as per the Budget presented on Monday.

Only 6.4 lakh new subscribers joined the EPF scheme in November, far lower than 7.7 lakh in October and 11.4 lakh in September, showed the latest monthly payroll data released by the Employees’ Provident Fund Organistaion (EPFO).Only 6.4 lakh new subscribers joined the EPF scheme in November, far lower than 7.7 lakh in October and 11.4 lakh in September, showed the latest monthly payroll data released by the Employees’ Provident Fund Organistaion (EPFO).

The government has slashed the expenditure in the Atmanirbhar Bharat Rojgar Yojana (ABRY), designed to incentivise job creation in the formal sector via employees’ provident fund subsidies, to Rs 1,000 crore in current fiscal, from Rs 6,000 crore estimated when the scheme was announced in mid-November 2020.

While approving the scheme, the Cabinet had, on December 9, scaled down the estimated outlay for ABRY to Rs 1,584 crore for 2020-21. The scheme’s outlay for 2021-22 is Rs 3,130 crore, as per the Budget presented on Monday.

ABRY, as it was first announced, required an outlay of Rs 36,000 crore for the period till FY23-end. The Cabinet later re-estimated the spending requirement at Rs 22, 810 crore by 2022-23. With the new Budget outlays, it is clear that the scheme will cost much less to the government.

To be sure, the number of new subscribers joining the Employees’ Provident Fund (EPF) scheme dropped to its lowest in five months in November 2020, suggesting that formal job creation is yet to gather pace despite businesses resuming operations following the lifting of Covid-induced lockdown restrictions.

Only 6.4 lakh new subscribers joined the EPF scheme in November, far lower than 7.7 lakh in October and 11.4 lakh in September, showed the latest monthly payroll data released by the Employees’ Provident Fund Organistaion (EPFO).

Under ABRY, the government provides subsidy for two years in respect of new employees recruited between October 1, 2020 to June 30, 2022, in the form of 12% employees’ contribution and 12% of employers’ contribution (24% of wages) towards EPF in respect of new employees in a firm employing up to 1,000 employees.

Also, the government will pay employees’ share of EPF contribution (12% of wages) in respect of new employees in establishments employing more than 1,000 employee for two years.

Any employee drawing monthly wage of less than Rs 15,000, who was not working in any establishment registered with the EPFO before October 1, 2020, and did not have a universal account number or EPF member account number prior to that date will be eligible for the benefit.

In addition, any EPF member having UAN drawing monthly wage of less than Rs 15,000, who exited from employment during the Covid-19 pandemic from March 1 to September 30, 2020, and did not re-join employment in any EPF-covered establishment up to September 30 can also avail the benefit.

Establishments with less than 50 workers will have to recruit at least two new employees and those with staff strength of more than 50 must employ at least five new employees for eligibility.

Formalisation of employment has been a focus area of the Narendra Modi government; it has, for instance, sought to expand the EPF base, via assorted subsidy scheme, including the Pradhan Mantri Rozgar Prosthahan Yojana for the textiles and garment sector.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Hiring activity rises 11 pc in April-June; IT, financial services, BPO/ITeS drive demand: Survey
2About 70 pc professionals feel skill gaps hampering productivity at workplaces: Study
3Here’s how Social Media is helping people to stay ahead in the age and earn