Govt Claims PMRPY Created 78 L Jobs Since 2016, But Is That True?

In response to an RTI query, the ministry of labour claims that 78 lakh new jobs have been added since 2016.

(Photo: Erum Gour/ The Quint)

Around 78 lakh new jobs were created in the formal sector between April 2016 and September 2018, under the flagship scheme of the NDA government – Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) – said the Ministry of Labour in response to an RTI filed by The Quint.

77,83,658 employees have benefited, between April 2016 and September 2018, under the Centre’s PMRPY, said the Ministry of Labour in its response to the RTI query. The ministry further claimed that 96,921 establishments across 36 states and Union Territories have benefited from the scheme till 30 September 2018.

Maharashtra Tops the List of Beneficiaries

Data provided by the Ministry of Labour shows that Maharashtra has the highest number of beneficiaries at 13,85,671 followed by Tamil Nadu (9,24,680), Karnataka (7,38,692), Gujarat (7,02,142) and Haryana (6,56,574).

Among the states going to polls, Chhattisgarh has 80,475 employees who have benefitted from the scheme, while for Rajasthan and Madhya Pradesh, the figures stand at 2,99,776 and 2,27,799 respectively.

(Infographic: Shruti Mathur/ The Quint)

What is ‘Pradhan Mantri Rozgar Protsahan Yojana’?

The Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) was launched by the BJP-led government in 2016.

Under the scheme, the government agreed to pay 8.33 percent of employers' contribution towards EPF for new employees who have joined on or after 1 April 2016. The scheme was applicable only for those employees who have a salary of up to Rs 15,000 per month.

It is one of the flagship schemes launched by the Centre in a bid to create more jobs by offering an incentive to the employers. The government had allocated a budget of Rs 1,000 crore for this scheme in 2016.

Equating PMRPY Beneficiaries With New Jobs

An organisation applying for benefits under the PMRPY has to be registered with the Employees' Provident Fund Organisation (EPFO).

According to the figures provided by the National Data Centre (EPFO), 87,015 establishments have been covered under the scheme between August 2016 to August 2018.

So, basically the government counts all the new PF holders who have enrolled under the PMRPY as new employees who have joined the workforce since 2016.

(Infographic: Shruti Mathur/ The Quint)

In February 2016, during his budget speech, Finance Minister Arun Jaitley had announced government’s new policy on job creation.

Under the sub-head, ‘Job creation’, Jaitley went on to elaborate in his budget speech how the government’s new incentive policy for employers will generate new jobs:

“In order to incentivise creation of new jobs in the formal sector, Government of India will pay the Employee Pension Scheme contribution of 8.33 percent for all new employees enrolling in EPFO for the first three years of their employment.”

Arun Jaitley (2016 Budget speech)

The figure for EPF contribution was revised to 12 percent in the Budget 2018-19.

But the method of counting new jobs based on new PF (Provident Fund) holders has been under the scanner with experts questioning the veracity of data.

Consider this, an organisation with 20 employees or more needs to register for PF contribution, and so if a workplace that had 19 employees till 1 April 2016, and has inducted one employee later, will count all the 20 employees as ‘beneficiaries’, with the government bragging about 20 new jobs. However, only one new job has been created in that organisation.

Ambiguity Over Number of Jobs Based on PF Accounts

In September 2018, a team of researchers at Bangalore’s Azim Premji University released the ‘State of Working India (SWI)’ report which claimed that unemployment is the highest in India since last 20 years.

On the issue of ambiguity regarding EPF (Employees’ Provident Fund) numbers, Amit Basole, lead author of the SWI 2018 report and Professor of Economics, says, “It’s hard to tell whether these are new jobs,” adding:

“It is difficult to say these are all new jobs without knowing how exactly the government has identified new workers in a firm. In principle, the scheme is supposed to target workers hired in the last three years, but the details of the implementation are not there in the public domain.”

Amit Basole, Professor of Economics, Azim Premji University

Details about the implementation of the scheme indeed seem to be sketchy as apprehended by Basole. To a query regarding the methodology used for counting the number of beneficiaries, the ministry has responded by saying:

“Employees who have benefited includes distinct members registered under PMRPY, who have at least one voucher of type PMRPY created, which has been included in any payment file (vouchers that have failed and have been reconciled were not considered).”

Ministry of Labour in response to an RTI query