The National Democratic Alliance government on Thursday announced an employment generation scheme, offering provident fund subsidies to employers for hiring new workers and those who lost job during the ongoing COVID-19 pandemic.
The scheme, known as Atmanirbhar Bharat Rozgar Yojana, will benefit workers with wages up to Rs 15,000 who have been employed for the first time by an establishment covered by the Employees’ Provident Fund Organisation. Additionally, “EPF members drawing monthly wage of less than Rs 15,000 who made an exit from employment during COVID-19 pandemic from March 1, 2020 to September 30, 2020 and is employed on or after 1 October 2020” will also be a part of the scheme,” Finance Minister Nirmala Sitharaman said here while announcing the next round of financial stimulus package.
“About 65 per cent of workers under the formal sector will be covered under the scheme,” the Finance Minister said.
Emplyoyers will have to add at least two new employees if they have total workforce of less than 50 and employers will have to hire a minimum of five new employees if their workforce if more than 50. The scheme will be in effect from 1 October 2020 and 30 June 2021, meaning new employment has to take place between this period.
“Establishments covered under the EPFO after the starting of the scheme to get subsidy for all employees,” the finance ministry said.
Central government will give subsidy for two years for new employment from October 2020-June 2021, which will cover both employers’ and employees’ contribution towards the Employees’ Provident Fund scheme. It will be credited into Aadhaar-seeded EPFO account of eligible employees. It will cover all establishments with maximum of 1000 workers, which is equivalent to 95 per cent of all establishments in India. However, establishments with more than 1,000 workers will also be entitled for subsidy towards the employer’s share.
At present, both employers and employees contribute 12 per cent each of a worker’s wage towards schemes under the EPFO.
The employment generation scheme is somewhat similar to the Pradhan Mantri Rojgar Protsahan Yojana, launched in 2016 and which was in effect till 31 March, 2019 for companies to take benefit. Through the PMRPY, the Centre paid the employer’s share of workers’ contribution towards the PF for three years. The most important criterion of the scheme was that firms would get support only if they hired a worker who was not part of EPFO schemes in the past.
The PMRPY scheme had benefitted 12.2 million workers in 152,899 establishments till date. The government had given benefits to the tune of Rs 8,300 crore to firms, Sitharaman said.