New Delhi: The employees’ provident fund, or EPF, a savings plan under which employees contribute 12% of their basic salary and the employer contributes an equal amount to a government-administered fund that is paid out either on retirement or disability of an employee, is restricted to establishments with 20 employees and more. Recently, the Union government proposed that the benefits of EPF be extended even to establishments employing 10 persons, and to all industries in the country. According to the National Sample Survey Organisation, a government body that conducts social and economic surveys, 44.35 million enterprises employ 79.71 million workers in the so-called unorganized sector. In its existing form, as of March 2006, the EPF scheme extends to 441,000 establishments.
Mint spoke recently to A. Viswanathan, central provident fund commissioner of the Employees’ Provident Fund Organisation, or EPFO, on this and a range of issues associated with the administration of the fund. Edited excerpts:
Where does the current decision to expand EPF coverage to firms with 10 or more employees flow from?
It (the decision) is not a sudden one. It has been on the cards for a long time.
Comfort zone: Viswanathan makes a case for EPF, saying that even at an interest rate of 8.5%, the contribution made to the fund pays quite well compared to, say, savings in banks since it is tax-free and is assured money which translates to assured security. Photograph: Harikrishna Katragadda / Mint
The second National Commission on Labour (2004) said we have to give security to every individual. How do you do it? Instead of expanding coverage to firms with 10 or more, or five or more and so on, they asked us to extend social security to everyone. Today, luckily we are in a stage called demographic boom. But along with a boom we have a huge lurking liability. In 30-40 years all these youngsters will become old. What is the income support they are going to have? The family structure is not going to stay like this. Family support which has been the backbone of Indian society for so long will break up. Due to urbanization there is strain on the family structure. EPF has to expand its coverage, otherwise society will have a problem.