Sitharaman’s Diwali gift! Govt to make PF contribution for these employees

Announcing a new job creation scheme by giving subsidy to those establishments that make new hires, Finance Minister Nirmala Sitharaman on Thursday said the subsidy would be to cover for retirement fund contributions by employees as well as employers for two years. Employees’ contribution (12 percent of wages) and employer’s contribution (12 percent of wages) totaling 24 percent of wages would be given to establishments for two years, she said.

Under the Aatmanirbhar Bharat Rozgar Yojana, every Employees’ Provident Fund Organisation (EPFO)-registered establishment taking new employees would get this subsidy.

The scheme will cover any new employee joining employment in an EPFO-registered establishment on monthly wages less than Rs 15,000.

It would also cover EPF members drawing monthly wages of less than Rs 15,000, who made an exit from employment during the COVID-19 pandemic from March 1, 2020, and is employed on or after October 1, 2020.

The scheme would cover establishments registered with EPFO if they add new employees compared to the reference base of employees as in September 2020.

The condition would be adding a minimum of two new employees for establishments with up to 50 employees. Those establishments with more than 50 employees, would have to give a minimum of five new jobs.

The scheme would be operational till June 30, 2021.

The Finance Minister also announced an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 31, 2021.

Under the scheme, fully guaranteed and collateral-free loans are provided to small and micro-enterprises.

Sitharaman also announced a guaranteed credit scheme for supporting stressed sectors.

The scheme would cover entities in 26 stressed sectors identified by the Kamath Committee plus the healthcare sector with credit outstanding of above Rs 50 crore and up to Rs 50 crore as on February 29, 2020.

An additional credit of up to 20 percent of outstanding as of February 29, 2020, would be given to entities in these sectors, she said.

The tenor of additional credit would be five years, including one year of a moratorium on principal repayment. The scheme would be available till March 31, 2021.