On Thursday, the central government announced to make amendments to the Employees' Provident Funds & Miscellaneous Provisions Act that will allow the members to withdraw amount up to 75 percent of their funds or three months' wages, whichever is lower. The decision was under Rs 1.7 lakh crore Pradhan Mantri Garib Kalyan (PMGK) package announced by Finance Minister Nirmala Sitharaman to provide relief to employees of the formal sector. Experts hailed the decision as it would offer major relief to people facing hardships during nationwide lockdown due to the Covid-19 pandemic.
Only 1.6% of the country's workforce covered
Prima facie, the decision looks encouraging but upon scrutiny, it shows that a major part of the subscribers has been left out of the scheme. As per a report in Business Standard, the scheme will cover only 16 percent of EPFO subscribers and 1.6 percent of the total workforce of 471 million in the country. Further, the burden to fund the wages of employees still lies on the employers as the government will support them in the form of reimbursement. An employer will have to provide the proof of payment of three months' salary of its workers, without paying for the PF amount, to claim the benefit.
An official statement of the ministry of finance read, "Wage-earners below Rs 15,000 per month in businesses having less than 100 workers are at risk of losing their employment. This (move) would prevent disruption in their employment." The announcement meant that the center will set aside Rs 5,000 crore towards the PF reimbursement scheme which benefits 7.9 million workers employed in around 377,000 establishments in the country.
However, looking at the number of establishments registered with EPFO and the number of employees under its purview, a large number of businesses have been kept out of this scheme. The EPFO has around has 563,000 establishments under its fold with 48 million workers who make provident fund contributions which means around 33 percent of the establishments and 84 percent of the workers registered with EPFO will not be benefiting from the scheme.