As part of the multiple relief packages for mitigating the impact of COVID-19, the government launched ‘Atmanirbhar Bharat Rojgar Yojana (ABRY)’ as a part of Atmanirbhar Bharat 3.0. The primary objective of the scheme is to incentive employers to generate new employment and to restore the lost employment due to COVID-19 Pandemic. What do the beneficiary numbers of this scheme say about the pattern of establishment across states? We compare ABRY numbers with the net payroll data released by EPFO
The COVID-19 pandemic has exposed the vulnerability of the employment situation in India. One of the profound impacts of the pandemic was the loss of employment across a variety of sectors. The closure of various kinds of formal enterprises led to termination and mass layoffs in certain cases. In addition to this, the informal sector employees like the daily wage earners, streetside vendors, etc., also suffered heavily due to the pandemic and its related restrictions.
The Quarterly Employment Survey (QES), conducted as part of the All-India Quarterly Establishment based Employment Survey (AQEES) by the Labour Bureau measured the sector-wise impact of the COVID-19 pandemic during the lockdown phase. The number of male employees fell from 217.8 Lakhs to 201.5 Lakhs, while the female employees fell from 90.0 Lakhs to 83.3 Lakhs, during the period 25 March 2020 to 30 June 2020, as per the first round of this survey, which looked at the employment status of the establishments in the selected 9 sectors.
The pandemic has also severely impacted the capital reserves of the small-scale enterprises. Realizing this, the Government of India (GoI) announced the ‘Atmanirbhar Bharat Package’ to minimize the COVID-19 impact. Rightly so, small-scale enterprises were accorded a significant part in this package. In addition to this package, the GoI launched ‘Atmanirbhar Bharat Rojgar Yojana (ABRY)’ as a part of Atmanirbhar Bharat 3.0. The primary objective of the scheme is to incentive employers to generate new employment and to restore the lost employment due to the COVID-19 Pandemic. Under this scheme, the GoI intends to incentivize the employers by paying both the employer and employee contributions of 12% each for enterprises with less than 1000 employees and only the employee’s contribution for enterprises with more than 1000 employees. This is applicable to firms registered with EPFO and for new employees on or after 01 October 2020 up to 31 March 2022 with wages less than Rs. 15,000 or to those who lost jobs between 01 March 2020 to 30 September 2020.
In this story, we look at some of the aspects of ABRY based on data provided in a recent answer in the Lok Sabha and analyse the trends while comparing these numbers with the net payroll data published by EPFO. While a one-to-one comparison is not possible because of the varied nature of the data from these sources, it can provide us some insights into the nature of establishments & employment across states. We have included limitations in each section of the analysis to ensure that the data & the methodology is correctly understood.
Disbursal trend of ABRY
The scheme was announced as a part of Atmanirbhar Bharat 3.0. The registration of new employees and employers is valid from 01 October 2020 to 31 March 2022 (extended from 30 June 2021). The contribution pay-outs are for a period of twenty-four (24) months only, and there is no state-specific allocation of funds for this scheme. The total outlay of the scheme is Rs. 22810 Crores for the entire period up to 31 May 2023 (before the extension was granted). Approximately 71.8 Lakh employees are expected to get benefitted from this scheme during this period.
The scheme was allotted Rs. 1000 Crores in revised estimates of 2020-21, while the actual expenditure has been Rs. 405 Crores. The allocation then increased to Rs. 3130 Crores in the budget estimates of 2021-22, while the revised estimates of 2021-22 increased it further to Rs. 5000 Crores. Considering the extension of validity for a period of 9 months, the budget estimates for 2022-23 have been increased to Rs. 6400 Crores.
As on 31 October 2021, around 1,12,060 establishments availed the benefit of Rs. 2214.47 Crores, with 36,60,141 employees getting benefitted. This increased to Rs. 2736.66 Crores with the establishments benefitted rising to 1,18, 489, as on 13 December 2021. As of 06 January 2022, the benefits were extended to 43,21,487 employees through 1,22,228 establishments. The latest figures include 1,34,568 enterprises, with 51,95,330 employees getting benefitted and Rs. 4055.90 Crores amount being reimbursed as of 12 March 2022.
Establishments in industrialized states benefitted much higher:
In an answer to the parliament in December 2021, the government had provided the state-wise number of establishments and the number of employees benefitted through this scheme. Upon looking at the average number of employees benefitted per establishment, it is evident that, in the industrialized states like Andhra Pradesh, Gujarat, Haryana, Maharashtra, Tamil Nadu, Karnataka and Telangana, the number is higher than the national average. This may also indicate the presence of large establishments in these states. Similarly, the less industrially developed states like Bihar, Rajasthan, West Bengal, Odisha, Madhya Pradesh had a relatively lower number of beneficiary employees per establishment. They stand below the national average also.
Limitation: Though it is hard to establish a direct correlation between the level of industrialization and the average beneficiaries per establishment considering the wage threshold of Rs.15,000, the trend is evident in the sense that industrialized states benefitted more in terms of employees per establishment.
Stark differences in the Net payroll data and the Beneficiaries of ABRY
The scheme began on 01 October 2020, and one criterion is that the firms must be registered with EPFO. For existing establishments, minimum of two employees (if the reference base of employees is less than 50) and minimum of five employees (if the reference base of employees is more than 50) must be added. For newly registered establishments between 01 October 2020 to 30 June 2021 (later extended to 31 March 2022), the reference base of employees shall be treated as zero. This should be done along with retaining the existing employees who form the reference base.
The reference base is the number of employees with ‘Universal Account Number (UAN)’ whose EPF/EPS contributions have been remitted by the employer for the wage month of September 2020, up to the due date.
The Employees’ Provident Fund Organisation (EPFO) under the Ministry of Labour & Employment, publishes the ‘Net Payroll data’ for every month. The net payroll data of a month provides data about the total number of new employees who joined, who exited and who re-joined during the said period.
If we compare the cumulative net payroll data of all months starting from October 2020 till November 2021 and the number of beneficiaries of the ABRY scheme as of December 2021, there is a huge difference between both these numbers. This difference is much more significant in lesser industrialized states. In the majority of cases, the percentage of beneficiaries out of the total payroll is lesser in industrialized states than those in the less industrialized states.
The reasons behind such trend could be multiple- reference base requirements, a greater proportion of employees having wages greater than Rs.15,000 in more industrialized states and so on. While it is difficult to establish the causal relationship between the two, it is evident that the wage difference between states could be one of the major factors behind such a trend.
ABRY benefit vs. the assumed benefit as per EPFO data
To arrive at this estimation, the below steps were followed.
- Assuming all the net payroll data employees are part of establishments having less than 1000 employees, the EPF contribution by the government is 24% (12% employee’s+ 12% of employer’s). Therefore, such payroll data is multiplied by 3600 (24% of Rs.15000) to get the beneficiary amount to be contributed by the government under ABRY.
- The above figure gives us the data for 1 month. This amount is repeated every month. Hence, we multiplied the above-calculated figure with the number of months of receipt of benefits to get the total benefits assumed to be received per beneficiary till November 2021. The assumption here is that all net payroll data employees are part of an establishment with less than 1000 employees and their salary is less than Rs. 15,000. For example, the above figure for the month of October 2020 is multiplied by 13 (October 2020 to November 2021- 13 months), for November 2020, it is multiplied by 12 and so on. This cumulative amount gave us the total assumed benefit under ABRY till November 2021 across states.
- The calculated cumulative figure is then compared to the actual amount of benefit received per state as quoted by the Government of India in a parliament answer in December 2021. This gives the percentage of actual benefit received per state under ABRY compared to the assumed benefit as per payroll calculation.
Upon performing the above operation, it is seen that in most of the industrialized states, the percentage of the actual benefit compared to the assumed benefit is lower than in the less-industrialised states. Industrialized states like Haryana, Maharashtra, Karnataka, and Telangana have this value below 7%, whereas the less-industrialized states such as Madhya Pradesh, Chhattisgarh, Rajasthan, Jharkhand, and Orissa have this above 10%. This validates the fact that industrialized states generally have bigger establishments and better salary figures which make them unqualified for the ABRY scheme.
Limitation: It is difficult to extract a direct correlation from this calculation, but the above calculation could be used as a proxy to estimate the type of establishments across states and the general salary levels.
Featured Image: Atmanirbhar Bharat Rojgar Yojana