Up to eight million employees have withdrawn their savings under the Employees Provident Fund (EPF) between April and July, amid the nationwide lockdown necessitated by the COVID-19 pandemic, a report says.
The provident fund, managed by the Employee Provident Fund Organisation (EPFO), contains the savings of nearly six crore people and has a corpus of Rs 10 lakh crore. From this, up to Rs 30,000 crore was withdrawn between April and July of 2020, the Economic Times reported, citing numbers from EPFO officials.
As jobs were shed, salaries were cut and medical expenses mounted across the country, a rise in the number of EPF withdrawals was seen that was much more than the usual outgo, ET reported officials as saying.
The EPFO expects 10 million more withdrawals in the coming days, the report adds.
The full impact of the withdrawals on the EPFO's finances would be known after a “detailed micro-level analysis” it says.
Anticipating a need for extra funds among the public, the government in March allowed over six crore EPFO subscribers to withdrawn up to three months of their basic pay and dearness allowance—or 75 per cent of the total EPF balance, whichever is lower—from their EPF account.
In May, the government cut the percentage of EPF contributions from 12 to 10 per cent for three months till August. In addition, for establishment with up to 100 employees, the government said they would pay the EPF contributions of both employer and employee to make up for the shortfall in revenues caused by COVID-19 and lockdown, with this scheme extended to August.
The surge in new withdrawals was noted by former Congress President Rahul Gandhi. Without naming the government, he tweeted the report, saying, "Snatched jobs, grabbed savings, could not even stop the disease from spreading. But they continued to show lofty false dreams.”