Under fire from political opponents and bowing to pressure from trade unions, including from RSS-affiliated Bharatiya Mazdoor Sangh (BMS), the government on Tuesday withdrew its new rules of provident fund withdrawal.
Within hours after announcing the decision to withhold the rules till July 31, Labour Minister Bandaru Dattatreya declared that the proposed move has been rolled back.
"We are cancelling the notification issued on February 10. The old system will continue," he told a press conference in Hyderabad on Tuesday night - his second there in the issue in less than five hours.
Dattatreya said the employees, whenever they want, can withdraw employer's contribution of 12 percent.
The minister said the Central Board of Trustees (CBT) of Employees' Provident Fund Organisation (EPFO) will meet to ratify this decision.
He had earlier told reporters in New Delhi that the final decision on withdrawal of employer's contribution to the provident fund corpus until the employee attains the age of 58 years will be taken only after July 31.
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He said the notification will not be implemented from May 1 as announced earlier and he would hold talks with all stakeholders and call a meeting of the CBT, which will take a final decision.
The minister, who is CBT chairman, assured that they will take a decision for the betterment of employees and to make the system foolproof.
He had said as a result of this decision, the earlier scheme for withdrawal of PF will continue till July 31 and Employees' Provident Fund Organisation (EPFO) subscribers can file for full and final settlement.
Dattatreya clarified that the notification restricted withdrawal of only 3.67 percent of the employer's share out of his total contribution of 12 percent, until after retirement, but during an earlier review it was also decided to allow an employee to withdraw even this amount for four purposes - treatment, purchase of house, marriage and education of children.
He said the decision to keep the move in abeyance was taken following representations received from trade unions and workers.
The BMS on Tuesday said they will continue to protest till all restrictions on PF withdrawal were removed.
The government decision came in wake of protests by garment workers in Bengaluru to press for removal of such curbs.
Workers of a garment factory took to the streets and blocked traffic on the busy Mysuru-Bengaluru highway and set many vehicles ablaze on Tuesday to protest amendments to the provident fund rules, police and eyetwinesses said.
Some 20 people were arrested and police fired warning shots as stone-pelting protestors attacked the Hebbagodi police station, a police officer said.
On the Bengaluru violence, Dattatreya said the protestors were migrant workers, who work for two to three years at one place and then migrate. "That is why they are demanding they should be allowed to take their money," he said.
Claiming that the Narendra Modi government is pro-worker, he said there was lot of misinformation going on in the country and it had taken many key decisions like enhancing the pension, bonus and insurance coverage.
Meanwhile, trade union leaders said that they are of the view that the curbs on withdrawal are unnecessary as the quantum involved is just 3.67 percent of the employer's contribution.
"It is an unwanted and unnecessary decision. All the trade union representatives in the board of trustees had opposed the move. Even a couple of employer's representatives were in agreement with our views," Centre of Indian Trade Union (CITU) president and CBT member A.K. Padmanabhan told IANS.
According to him, it is a confusion created by the bureaucracy and there is no rationale for restricting the withdrawal.
"It is after all the employees' money. Now it seems there will be one more notification," added Padmanabhan, alleging that the reduction in PF interest rate, and the budget proposals on taxing the PF corpus at the time of withdrawal are all part of the government's plan to push the people's savings towards the share market.
In February, the labour ministry had issued a notification restricting 100 percent withdrawal of provident fund by members unemployed for more than two months. The earlier decision was then deferred till April 30 but as protests persisted, the government has decided to postpone it yet again.
The EPFO had also restricted withdrawal of PF to the employee's own contribution and interest earned on that, if the claimant has remained unemployed for more than two months.
According to the new norms proposed earlier this year, subscribers are not to be allowed to claim withdrawal of PF after attaining 54 years of age, and would have to wait till 57. Earlier norms allowed contributors or subscribers to claim 90 percent of their accumulations in their PF account at the age of 54 years, and the final claims to be settled just one year before their retirement.