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Cabinet approves new employment subsidy scheme with lower outlay

The scheme as approved by cabinet seems to have a much lower outlay than what was announced by FM Nirmala Sitharaman in November.

December 09, 2020 / 05:00 PM IST
Worker with cartons of fabric at a textile market in Surat. (PC-NYT)

Worker with cartons of fabric at a textile market in Surat. (PC-NYT)

The Union Cabinet on December 9 approved the 'Aatmanirbhar Bharat Rozgar Yojana' that is aimed at incentivising employers and employees in order to push job creation. The scheme was first announced by Finance Minister Nirmala Sitharaman in November as part of a pre-diwali set of announcements, to revive the economy.

However, the scheme as approved by cabinet seems to have a much lower outlay than what was announced by Sitharaman. Then, it was said that the total outlay for the scheme, for an unspecified number of years, would be Rs 36,000 crore, with an immediate expenditure of Rs 6,000 crore.

The scheme approved on December 9 though has a planned outlay of Rs 22,810 crore for 2020-2023, and an immediate outlay of Rs 1,584 crore for the current financial year.

Under the scheme, the Centre proposes to pay 12 percent employees' contribution and employers' contribution - 24 percent of wages - towards employment provident fund (EPF) for new employees in establishments employing up to 1,000 employees for two years.

For establishments employing more than 1,000 employees, the government proposes to pay on 12 per cent employee contribution for two years. These subsidies will be provided for new employees engaged on or after October 1, 2020, and up to June 30, 2021.


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“An employee drawing monthly wage of less than Rs 15, 000 who was not working in any establishment registered with EPFO before October 1, 2020, and did not have a Universal Account Number or EPF Member account number prior to that date will be eligible,” a press release on cabinet decisions stated.

The scheme will also be applicable for any EPF member drawing monthly wage of less than Rs 15,000 who was unemployed during the Covid pandemic from March 1 September 30 this year.
Arup Roychoudhury
first published: Dec 9, 2020 05:00 pm
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