Hiring New Employees from 1 October 2020? Know how to get subsidy from Govt under new scheme
Atma Nirbhar Bharat Rozgar Yojana announced to incentivise job creation in the nation
The economic impact of the 2020 coronavirus pandemic in India has been largely disruptive. The COVID-19 crisis led to a spike in the country’s unemployment rate. Analysts have been warning about the spectre of unemployment ever since the country was put under a lockdown on March 25 by Prime Minister Narendra Modi to arrest the spread of the coronavirus infections. Scenes of migrants fleeing urban centres including Delhi and Mumbai only confirmed the long-held concerns on their employment as the economic activity came to a grinding halt. In September 2020, India saw an unemployment rate of over 6%.
This was a significant improvement from the previous months. A damaging impact on an economy as large as India’s caused due a total lockdown was imminent. Unemployment went up to 23% in May 2020. This was possibly a result of a decrease in demand as well as the disruption of workforce faced by companies.
Earlier, the Prime Minister’s Rozgar Protsahan Yojana (PMRPY) was implemented up to March 31, 2019 to incentivize formalisation and creation of new employment. Under this scheme, total benefit of Rs 8,300 crore has been given to 1,52,899 establishment covering 1,21,69,960 beneficiaries.
Further, in order to curb the unemployment and issue and to provide a major boost to employment generation in the country in the formal sector post the pandemic, the government launched a new job creation scheme under Atmanirbhar 3.0. The newly launched Aatma Nirbhar Bharat Rozgar Yojana will incentivize job creation in the country by providing subsidy for two years in respect of newly eligible employees engaged on or after October 1, 2020 under the scheme.
This scheme is effective from 1st October, 2020 and will be operational till 30th June, 2021. It is said to be similar to the Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) which was announced in August 2016.
Who will the Scheme be applicable to?
The scheme will be applicable to:
- EPFO registered establishments if they take in new employees or those who lost jobs earlier.
- Any new employee joining employment in EPFO registered establishments on monthly wages less than Rs 15,000.
- EPF members drawing monthly wage of less than Rs 15,000 who made exit from employment during COVID-19 pandemic from 1st March, 2020, to 30th September, 2020, and is employed on or after 1st October, 2020.
What establishments will be eligible to avail this Scheme?
Establishments registered with EPFO if they add new employees compared to reference base of employees as in September 2020 as under will be eligible for this Scheme:
- Minimum of two new employees if the reference base is 50 employees or less
- Minimum of five new employees if the reference base is more than 50 employees
Establishments registering with EPFO after the commencement of scheme will get subsidy for all new employees.
How will subsidy be provided under this Scheme?
Central Government will provide subsidy for two years in respect of new eligible employees engaged on or after 1st October, 2020, at the following scale:
- Establishment employing up to 1,000 employees: Employee’s contribution (12% of wages) and employer’s contribution (12% of wages) totalling 24% of wages.
- Establishments employing more than 1,000 employees: Only employee’s EPF contributions (12% of EPF wages)
The subsidy support will get credited upfront in Aadhaar seeded EPFO account (UAN) of the eligible new employee
The scheme is expected to provide dual benefit. While on one hand, the scheme is expected to encourage the employers and business establishments to increase the number of workers hired, on the other hand, the scheme will help a large number of job seekers find employment in EPFO-registered establishments.
The Finance Minister also informed that more than 95% of all establishments and 65% of all employees in the formal sector were estimated to be covered in the first category, wherein EPF contributions will be given by government by way of subsidy support. She also said the RBI predicts a strong likelihood of the Indian economy returning to positive growth in Q3 of the fiscal year, ahead by a quarter of the earlier forecast. Besides, the existing Emergency Credit Line Guarantee Scheme has also been extended till 31st March 2021.
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