Interest credit expected this month for EPFO subscribers

Core principles have been laid in the code. So, you can’t go beyond what the law is, but the rule-making is also very important in the sense that the procedure to be followed to give effect to what the law says should also be as simple as possible.

For example, the law may say that a licence is to be given, now whether that licence is to be given after an application is made in 15 days or 30 days? Whether it has to be given automatically? Whether after the expiry of 15 days, it is auto-generated through the website? Those sorts of things come in the rules.

Then there are several other issues that earlier used to be very prescriptive. For example, in a canteen, we would even specify the height of the ceiling — from the floor it should not be less than 1.83 metre. These things, when actually transcribed in the field, become very prescriptive. These sorts of things need to be looked into.

There is a fine balance, because if you don’t prescribe anything, it becomes open to interpretation, and leaves a lot of things to discretion.

But if you are too prescriptive, there may be issues. So, we have to simplify things as well as maintain the balance, where the interests of the workers and the employers are both satisfied.

One has to look at how the world has moved and whether prescribing a limit itself leads to better outcomes. Because one has to look in the overall context of employment, skill upgradation and output productivity. Flexibility should lead to higher employment, that is my belief. Provision related with government’s consent for hire and fire could lead to many of the companies restricting their numbers or having their employees work informally. It actually leads to informalisation of employment. And the employees are, while doing the same work or may be more, denied the benefits of a permanent worker.

So, the new provision actually leads to more formalisation and better outcomes for the employees.

In the informal sector, especially migrant labour, the unemployment data is very difficult to come by. This can only be through a survey. A migrant labourer could be working in a formal establishment as well as informal establishment. He might be working at a roadside dhaba or can be just a street vendor. So, how many people lost their jobs, or rather livelihoods, is very difficult to estimate. In the formal sector, among those registered in EPFO, concrete numbers are available.

I don’t think there is any problem in EPFO interest credit. Some approvals are to be taken and they are in process. Once approvals are obtained, interest will be credited. I hope interest should be credited some time in November.

As I understand, the Central Board of Trustees of EPFO is not in favour of making any change.

The defined pension of ₹1,000 was also introduced in 2014. If we increase the limit, it will entail additional contribution from the government because the government will have to provide some funds for defined pension irrespective of how much subscriber contributes.