Finance Minister Nirmala Sitharaman’s relief package to help people cope with Covid-19 lockdown and the significant impact on economic activity that the lockdowns ordered to contain the highly-contagious disease has had. There have been serious concerns that firms could end up sacking people to reduce costs.
The Rs 1.7 lakh crore relief package attempted to persuade small firms to keep their workforce intact, offering to pay the employee and employer contributions for firms which have less than 100 employees and most of them – 90 per cent – earn less than Rs 15,000 a month.
This will help about 4.8 crore workers and prevent a disruption in their employment, she said.
These payments will be made for three months, she said.
Under the rules, every month, 12% of an employee’s basic salary goes into the Employees Provident Fund account and the employer matches the contribution. Of the employer’s contribution, 8.33% goes into the Employees’ Pension Scheme (EPS), which offers pension from the age of 58 years.
The government had used a similar format starting 2018 to encourage small firms to take more people on its rolls rather than keep them off the books and funded the employer contribution for new recruits.
At Thursday’s media briefing, the Sitharaman also announced a decision to change to rules to let people withdraw money from their retirement fund corpus, or provident fund, to meet their expenses.
She said the Employees’ Provident Fund Regulations will be amended to include pandemic as the reason to allow people to withdraw 75 percent of the accumulated savings, or three months of the wages, whichever is lower, from their accounts.
Families of four crore workers registered under EPF can take benefit of this window.
For another set of daily wagers employed under the government’s employment guarantee scheme, MNREGA, the wage rate was increased to Rs 202 from the existing rate of Rs 182. This would amount to a raise of Rs 2,000 per worker for 100 days of work. This move is likely to benefit 5 crore people once the lockdown ends or district authorities make an exception for the rural employment scheme.
The finance minister also announced a slew of measures including insurance cover worth Rs 50 lakh per person for sanitation workers, ASHA workers, doctors, nurses and paramedics, free 5 kg rice and 1 kg pulse for approximately 80 crore people through the PDS system, Rs 1,000 ex-gratia for old age pensioners and widows for the next three months and a Rs 500 for woman Jan Dhan account holders.