As many manufacturing units have been forced to shut down their operations, the Indian government has decided to extend a helping hand to India Inc. through its social security bodies. The Labour Ministry has decided to offer flexibility to industries to submit Employees State Insurance Corporation (ESIC) deductions and contributions for the month of April by mid-June, which will give a liquidity boost of Rs 1400 crore to companies. Also, the Ministry is considering to take a similar measure for Employees’ Provident Fund Organisation (EPFO). If implemented, this will give liquidity boost of another Rs 12,500 crore to the firms and related establishments that are facing the problem of dent in demand.
As of now, this relief has been announced for one month only, but if it gets extended, the liquidity boost amount will get doubled.
Each month, industrial firms contribute 3.25 per cent of their salaries and the employees contribute 0.75 per cent for ESIC statutory deduction. The ESIC subscribers and their families get unemployment benefits and other health benefits from primary and tertiary care, at ESIC hospitals. Annually, ESIC receives Rs 16,745 crore from these deductions. Similarly, EPFO also collects Rs 12,500 crore every month from these deductions, where the employer contributes 12 per cent of the salary and the employee also has to contribute the same amount. Companies who are enrolled with ESIC and EPFO need to submit these contributions within 15 days after the month ends. This move from the Government will give more liquidity to the employers.
Last year also relief was granted for three months. This is essential across sectors, such as the the automobile sector and the MSME sector, that witnessed a lot of shut down and pay cuts. Such relief and hand holding from the government brings great relief to industries.