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Salaried workers withdraw a massive Rs. 39,400 crore from EPFO during lockdown, Govt tells Lok Sabha
Of the total 10.4 million salaried workers who dipped into their retirement savings, at least 8.1 million are those who earn a salary of less than Rs. 15,000 per monthby Prashant K. Nanda
New Delhi: Salaried employees withdrew a massive Rs. 39,400 crore between 25 March and 31 August as Covid-19 impacted lives and livelihood of millions of workers, the union labour ministry informed the Lok Sabha Monday.
Of the total 10.4 million salaried workers who dipped into their retirement savings during the above time frame, at least 8.1 million are those who earn a salary of less than Rs. 15,000 per month each, reflective of the hardship the bottom of the pyramid faced during the Covid-19 lockdown, and the ensuing income and job loss.
Giving a detailed break-up of the lockdown withdrawals, the labour ministry said that since the beginning of lockdown on 25 March, till end of August, Rs. 39,403 crore have been withdrawn of which over 40% are from three industrial states of Maharashtra, Tamil Nadu and Karnataka.
While EPF subscribers in Maharashtra withdrew Rs. 7,837.85 crore, in Karnataka, this was Rs. 5,743.96 crore and in Tamil Nadu including Puducherry the amount of withdrawal was Rs. 4,984.51 crore. Delhi and Telangana are the other two states where the EPFO offices saw a good withdrawal by their subscribers amount to over Rs. 5500 crore.
The withdrawal of over Rs. 39,400 core is almost 30% of the EPFO’s annual accruals and may have a long term impact on the financial health of the retirement fund body.
Though the labour ministry did not give any details about the withdrawal reasons, data from EPFO showed that at least a majority of the withdrawal numbers are related to Covid-19 advances. EPFO statement issued earlier this month has said that 55% of advance claims settled during April-August 2020 were related to the recently introduced Covid-19 advance, while around 31% of advances settled during the period pertained to illness claims.
“With EPFO settling advance claims within 3 days, PF accumulations are now seen as liquid assets that can timely meet the need of the subscribers during crisis. Consequently, members have shown greater trust in EPFO by not opting for final withdrawal or closure of account instead choosing to apply for PF advances to meet their financial needs," the EPFO had said earlier this month.
The loss of income and job loss has expedited the need for dipping into the EPFO money. According to Centre For Monitoring Indian Economy salaried jobs were down from 86 million in FY20 to 65 million in August underling 21 million job losses the country faced due to the pandemic.
In response to Separate question on number of migrant deaths during lockdown, the union labour ministry said there is no such data is available but added that the central government has issued comprehensive Advisory Guidelines on 27 July to all the states and union territories for the welfare of the migrant workers returning to the destination states in the backdrop of Covid-19.