PF subsidy scheme: job creation a quarter below target

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As many as 5.48 million people secured new formal jobs or secured new employment in the formal sector up to the end of March 2022, end date, under a provident fund grant program launched by the government at the end of 2020. The revised target of the program – Atmanirbhar Rojgar Prosthan Yojona (ABRY) – was 7.18 million job creations / re-employments.

Within the framework of the ABRY, the Center credits for a period of two years both the share of employees (12% of salaries) and the share of employers (12% of salaries) of the contribution to the PF for companies employing up to 1,000 people and the share of employees for workers in units employing more than 1,000 people who earn less than Rs 15,000 per month.

In addition, establishments that hire new employees from October 2020 until March 2022 or re-employ those who lost their jobs between March 2020 and September 2020 can benefit from the program. The program was announced several months after the first wave of the coronavirus which affected economic activities and trade in the country in March 2020. While the registration window for the program ended on March 31, those registered will continue to benefit from the advantages for two years. from the date of enrollment in the plan.

Labor economist and XLRI professor KR Shyam Sundar said employers will not have enough incentives to create jobs if aggregate demand in the economy is relatively weaker.

“In addition to the PF subsidy, which is on the supply side, the government should have introduced a direct benefit transfer (DBT) to put money in people’s pockets, which would have strengthened the demand side product markets. Excessive concentration of supply and neglect of demand has been the main concern, leading to the crisis in the labor market,” he said.

ABRY was announced as one of the measures in the Aatmanirbhar Bharat 3.0 package to boost the economy and increase formal sector job creation during the post Covid recovery phase. The program was aimed at minimizing the impact of the Covid-19 pandemic on the country’s economy and alleviating the hardships faced by low-wage workers.

When approving the program in December 2020, the Cabinet had fixed the expenditure of the program at 22,810 crores for the entire program period 2020-2023. In June last year, the deadline for registering beneficiaries was extended by nine months to March 2022, but the estimated amount of expenditure was reduced to Rs 22,098 crore. At the same time, the number of targeted beneficiaries has been increased to 7.18 million from the previous projection of 5.85 million.

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