Govt to offer relief to Indian businesses via social security bodies
Some business sectors are seeking government help and relief as they are impacted by the second wave of Cvid-19.
As India struggles with the second wave of covid-19,a slew of measures has been announced by the Union Labour Ministry under which steps will be taken to offer relief and liquidity boost to India Inc to mitigate the impact of covid-19 related lockdown on the business sector.
These efforts by the Central Government to help Indian business sector via its social security organisations are expected to provide much needed relief to it when the pandemic has forced businesses to shut down in many states and UTs.
As per by the initiative of the Labour Ministry, it has been decided to offer flexibility to industries to submit Employees State Insurance Corporation (ESIC) deductions and contributions for April by mid-June, providing them a liquidity boost of ₹1,400 crore.
Similar measures have been considered via the Employees’ Provident Fund Organisation (EPFO),which would provide a liquidity boost of ₹12,500 crore to companies who have been severely struck down by the stringent lockdown measures and hence facing a severe dent in demand.
While applauding these initiatives, a government official requesting anonymity said that both EPFO and ESIC, if being put together, will provide a liquidity boost of ₹14,000 crore. While this is only for a month and if it gets extended, even for a month, the amount then is likely to double.
While the ESIC proposal has been approved, the EPFO issue is still on the table. “We have already approved the ESIC proposal. They are allowing the submission of deductions for April by 15 June. EPFO following the same is only a logical extension. It’s being considered, and we shall announce details once a final decision is taken," said Apurva Chandra, union labour and employment secretary.
Through a streamlined salary deduction which includes industrial employers contributing 3.25% of their basic salaries and employees contributing 0.75%, ESIC receives around ₹16,745 crore a year on account of this statutory deduction. The ESIC subscribers along with their family members receive healthcare benefits from the ESIC hospitals and dispensaries across India and it also offers unemployment benefits to the subscribers.
Similarly, EPFO receives ₹12,500 crore from subscribers via statutory deductions every month wherein an employee contributes 12% of his/her basic salary.
Companies who are attached with EPFO and ESIC are required to submit the deductions within 15 days once a month ends. An extension of the submission deadline would give more short-term liquidity in the hands of employers.
“The extended window will benefit employers. We are not charging penalties or damages during this period," an ESIC spokesperson said.
A government official said that while the economic situation of today is not that bad like that of last year when the whole of Indian business sector was badly struck by the covid-19 lockdown, but even today some sections are seeking government help and relief as they’re now impacted by the second wave of covid-19.
While the pandemic has severely impacted the consumption and even the production units are facing the same crisis. Several automakers such as Maruti Suzuki India Ltd, Hero MotoCorp Ltd, Hyundai Motor India Ltd and India Yamaha Motor, have either suspended production at their factories or sharply cut output.