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In picture: A man counts 1000 Indian rupee banknotes outside a branch of Bank of India in Mumbai, India, November 10, 2016. [Representational image]Reuters file

Union Minister of State for Labour Bandaru Dattatreya on Monday, July 24, provided a much-needed boost to employees of tech start-ups, saying they can claim benefits like provident funds that are part of the labour laws of the country. 

The statement came in the backdrop of information technology (IT) sector crisis in India.

The minister's announcement means start-ups cannot deny employees benefits like provident funds.

What the minister said

In a written reply to a question in the Lok Sabha, Dattatreya said: "The workers of IT start-ups and small-scale industries may avail of benefits of provisions of the Employees Provident Funds and Miscellaneous Provisions Act, the Employees State Insurance Act and social security schemes under the Unorganised Workers Social Security Act depending on eligibility." 

The minister's assertion is important because the Central government has launched a number of schemes for salaried professionals, but it requires organisations to be linked to them and pay their employees dues regularly. 

This may not always happen, especially because studies have shown close to 90 percent start-ups fail within their first five years.

And given the pains a start-up has to go through to raise funds for expansion, some might opt to spend more money on infrastructure now and employee benefits later, once they have better cash flow. 

Bandaru Dattatreya
In picture: Minister of State for Labour and Employment (Independent Charge) Bandaru Dattatreya.Press Information Bureau

Current situation

India's IT sector has been hit by a number of factors in recent times. Primary among these is the US curb on H1-B visas, which Indian IT companies often use to get Indian professionals to the US to work on projects for lower remuneration. 

Since then, there has been news of layoffs in many IT companies in India, which have looked to the US to get more employees

The fear of being laid off has driven people to suicide. On the other hand, some are looking to get re-skilled in order to find jobs in newer, more relevant fields.