The central government has 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 step has been taken as an emergency step to contain any hardships faced due to lockdown. In a press meet, Finance Minister Nirmala Sitharaman said, "This announcement, I expect, will benefit 4.8 crore workers, who are registered with the EPF, and therefore will be in a position to withdraw the money."
Earlier this week, Prime Minister Narendra Modi announced a 21-day lockdown to control the spread of deadly novel Coronavirus which has infected over 600 people in India, killing another 13. All the businesses, educational institutions, gathering have been banned except essential goods and services during this three-week lockdown.
Assistance to the poor during lockdown
It is to be noted that as per the existing rules, non-refundable advances are permitted only for specified purposes such as housing, marriage, etc. Even for such withdrawals, the employee has to invest for a minimum services period.
The Finance minister further added that the central government will financially assist the Employees' Provident Fund (EPF) contribution, both of employer and employee, put together 24 per cent of an employee's basic salary, for next 3 months that would be applicable to the establishments having up to 100 employees and 90 per cent of them earn less than Rs 15,000. The decision was taken are a part of Rs 1.7 lakh crore Gareeb Kalyan package announced the Modi government to support the poor during who are suffering due to coronavirus lockdown.
Experts have welcomed the decision, Saraswathi Kasturirangan, partner at Deloitte India, "The proposal to permit non-refundable advance to employees out of their PF balances will help employees to tide over their liquidity issues." Some experts have argued that on withdrawal, the disbursal amount should be paid within two or three days and not in a month. "It's also important for the government to ensure that online applications for withdrawals are processed within two or three days and not in a month. If the withdrawal is being made it is likely because there is an urgent need for liquidity." Bloomberg quoted Harshvardhan Roongta, a financial planner as saying.