The Cabinet on Wednesday approved Aatmanirbhar Bharat Rozgar Yojana (ABRY), designed to incentivise job creation in the formal sector via employee provident fund (EPF) subsidies, but with a reduced outlay than announced on November 12 under Stimulus package 3.0.
The scheme would now entail expenditure of Rs 1,584 crore for the current financial year and Rs 22,810 crore for its entire 2020-2023 duration; earlier the scheme’s total cost to the exchequer was pegged at Rs 36,000 crore, and the spending in FY21 at Rs 6,000 crore.
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 schemes, including the Pradhan Mantri Paridhan Rozgar Protsahan Yojana (PMPRPY) for the textiles-and-garment sector. Though the PMPRPY was meant to create 1 crore new jobs, the achievement was far less.
However, the EPF base has indeed expanded at a faster rate under the Modi regime. While the pandemic resulted in a shrinking of the EPF subscriber base in April-May, net addition to the EPF payroll data, as per provisional data, was close to 15 lakh in September, compared with a monthly average of 6.5 lakh in 2019-20.
Under the ABRY, the government will provide subsidy for two years in respect of new employees recruited between October 1, 2020 to June 30, 202, in the form of 12% employees’ contribution and 12% employers’ contribution (ie 24% of wages) towards EPF in respect of new employees in establishments employing up to 1,000 employees for two years.
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 this year and did not rejoin employment in any EPF covered establishment up to September 30 can also avail the benefit.
“The EPFO shall work out modality to ensure that there is no overlapping of benefits provided under ABRY with any other scheme implemented by EPFO,” the government said in a statement.
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.