Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), a scheme launched in August 2016 by the Modi government to give a boost to formal employment is becoming a huge success story. So far, 98.38 lakh people have been benefitted from the scheme with the highest number of beneficiaries coming from Maharashtra. Under PMRPY, the government pays 8.33 percent of employee contribution towards Employee Pension Scheme (EPS). The government also pays 3.67 percent of Employees Provident Fund (EPF) contribution for new employees. The scheme is targeted at employees earning up to 15,000 rupees per month. The organisations can register under this scheme till 31st March 2019.
“Government of India is paying Employer’s full contribution i.e. 12% towards EPF and EPS both (as admissible from time to time) w.e.f. 01.04.2018 for a period of three years to the new employees and to the existing beneficiaries for their remaining period of three years through EPFO” read a statement released by Ministry of Labor & Employment. Therefore, almost every employee in the formal sector with an income up to 15,000 rupees per month, will get benefits of this scheme for a period of three years. The organisations are actively participating in the scheme as 1.21 lakh establishments have registered almost 98.38 lakh employees so far.
The scheme is targeted at people working in Micro, Small and Medium Enterprises (MSMEs) and having a low salary. So far, the unorganized sector dominated low paying jobs in the country. The employees in the unorganised sector were generally vulnerable to emergency and they also lacked provision of social security. Modi government is trying to formalize the economy with steps like demonetization, GST implementation, and EPFO.
The states with high level of formal employment and good industrial base have got more benefits from the scheme. Maharashtra has the highest number of beneficiaries followed by Tamil Nadu with 11, 77,433 beneficiaries. A subsidy of almost 3 thousand crore rupees was disbursed between the period of Apr-2016 to Dec-2018. The lowest per capita beneficiaries were in the states like Uttar Pradesh, Bihar which have very low per capita formal employment.
The Employees’ Provident Fund Organization (EPFO) is an organization which assists the central government in administering Provident Fund Scheme, a Pension Scheme and an Insurance Scheme for the workforce engaged in the organized sector in India. The body is under the administrative control of the Ministry of Labor and Employment, Government of India. Currently, the social security contribution is fixed at 24 percent of which the employees and employer contribute an equal amount of 12 percent. While employee contribution directly goes to provident account, employer’s contribution is divided among provident fund account, pension account, and deposit linked insurance scheme.
The government is incentivizing formalisation process through schemes like PMRPY. The Modi government is planning to provide social security benefits to 50 crore workers in the country. The scheme for which a comprehensive plan has been prepared by the Labour Ministry aims to initially launch three programs – old age pension, life insurance, and maternity benefits while leaving out unemployment, child support, and other benefits – to most working citizens.