EPFO withdrawals touch Rs 30,000 crore in four months amid Covid pandemic
The coronavirus pandemic has forced many people to dig into their savings as most have lost jobs, faced salary cuts or seen a rise in other expenses. Numerous factors have led to large-scale withdrawals from the Employees Provident Fund Organisation (EPFO).
According to a report published in The Economic Times, as much as Rs 30,000 crore has been withdrawn by approximately 8 million EPFO subscribers in the last four months — April to July — in the wake of the pandemic situation in India.
Sources told the publication that the massive outgo over the last four months will impact the fund’s earnings drastically in 2021. They also confirmed that the amount of withdrawal has increased due to a high number of job losses, salary cuts, and other expenses during the pandemic.
An EPFO official told The Economic Times that nearly three million beneficiaries withdrew over Rs 8,000 crore under COVID window while the remaining Rs 22,000 crore was withdrawn by 5 million EPFO subscribers under the general window.
It may be noted that a special COVID window for withdrawals was announced by Finance Minister Nirmala Sitharaman soon after a nationwide lockdown was declared in India.
However, the sharp rise in outgo from the fund could drastically impact the retirement fund bodies’ efficiency.
Another government official told the publication that EPFO withdrawals are increasing rapidly with a sharp rise in coronavirus cases in the country.
Several reports indicated earlier the EPFO rates are likely to fall further this year as it will be tough for it to maintain 8.5 per cent rate at a time RBI has been cutting policy rates.