Around 9 lakh workers out of the 1.2 crore who benefited from a government scheme for job creation in its first three years were later found to be ineligible for it, Business Standard reported on Thursday. The Employees’ Provident Fund Organisation has already recovered Rs 222 crore from these employers, and has blocked the provident fund accounts of the workers.
The Pradhan Mantri Rojgar Protsahan Yojana, or the “scheme for incentivising employment”, applies to employees who have joined the formal sector for the first time. The government pays the employer’s full share of the pension scheme and provident fund for such workers for three years. When the scheme was launched in August 2016, the government paid only for the pension fund, but has added the provident fund since April 2018.
According to the government, the scheme has two benefits: it encourages employers to hire more workers, and it brings in more workers to the formal sector. The data about beneficiaries of the scheme is taken into account when the government reports creation of jobs in the economy.
To ensure that only first-time formal sector employees benefited from the scheme, the government said that employers would get the incentive only for hiring workers who were not part of EPFO schemes before April 1, 2016. However, it turned out that until July 16, 2019, as many as 8,98,578 employees who got the benefit already had a PF account before the cut-off date, Business Standard reported, citing government documents.
This means that these employees were already part of the formal economy before starting work with these companies, and were ineligible for the scheme. This was about 7% of the 1.2 crore workers who had benefited from the scheme till that time.
An official at EPFO told Business Standard that the situation might have occurred due to lack of awareness among workers. “Apart from that, in some cases, workers might have closed their PF accounts after withdrawing all the money,” the official said. “This led to creation of a new account unintentionally.”
Rituparna Chakraborty, president of Indian Staffing Federation, said: “Checks and balances should have been put in place since day one as it’s hard for employers to validate a worker’s claim that they didn’t have a PF account in the past. The EPFO does have tools to check for duplication.”