Seven states, UTs record decline in number of active EPF subscribers

Seven out of 24 major states and union territories saw a dip in the number of active subscribers contributing to the Employee Provident Fund (EPF) between March 2021 and June 2023, shows the government data. However, at the national level, the total number of employees contributing regularly to the EPF grew by nearly eight percent in the same time period. 

In response to a question in the Lok sabha, Minister of state for Labour and Employment Rameshwar Teli said that the total number of regular members, contributing at least once during the last one year, increased to 63.22 million from 58.6 million in the corresponding period.

Among the states that saw a dip in the active accounts, Punjab saw the largest decline (6.76 per cent), followed by Uttarakhand (5 per cent), Himachal Pradesh (2.83 per cent), Gujarat (1.92 per cent), Madhya Pradesh (1.13 per cent), Jammu and Kashmir (1.09 per cent) and Tamil Nadu (0.08 per cent).

An account becomes inoperative under the EPF only where there has been no contribution from either the employee or the employer for 36 months, or the member has not withdrawn money within 3 years after leaving the company. However, interest is still paid on these inoperative accounts.  

KR Shyam Sundar, visiting professor, Impact and Policy Research Institute says that the increase in total active Universal account numbers (UANs) in the corresponding time period can be primarily due to the formalisation of workforce through government incentives, as the fresh formal job creation still remains a challenge. 

“While the formalisation initiatives are showing results, as the number of active Universal account numbers (UANs) have increased, but their decline in major industrial states [like Gujarat and Tamil Nadu] points to the job creation challenge that still remains. Moreover, it also shows growth in the services sector, which is the prime mover of the Indian economy is also struggling to create jobs as evidenced in [UANs] decline in states like Uttarakhand, HImachal or Jammu & Kashmir,” he added. 

Echoing similar views, an economist with a leading automobile maker adds that the dip in active subscribers during this period could be on account of slow job creation in the manufacturing sector, as there is a high correlation between the two. "In the case of industrial states like Gujarat and Tamil Nadu, this correlation is even higher. Since the manufacturing sector contracted for two consecutive quarters last fiscal year, and before that, it was inadvertently affected by successive covid waves which is likely to have exacerbated job creation in these states amidst a slowdown in exports and fears of global slowdown", he added.

Meanwhile, the highest growth in the active subscribers in this time period was recorded in Odisha (13.9 per cent), followed by Bihar (12.8 per cent), Maharashtra (12.7 per cent), Telangana (10.9 per cent), Delhi (9.8 per cent) and Rajasthan (9.2 per cent).    

Rituparna Chakraborty, co-founder, TeamLease Services, says that the growth in active subscribers in the above states is a testimony to the formalisation initiatives of the government as they incentivised a lot of employers to regularise their contract and informal workers. 

“Schemes like Atmanirbhar Bharat Rojagar Yojana have proved effective in increasing the formal fold. Though formalisation is a welcome step, efforts should be taken to generate more jobs,” said Chakraborty.