Chanakya IAS Academy Blog


Saturday Scheme

Pradhan Mantri Rojgar Protsahan Yojana (PMRPY)

Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) was launched in August 2016. Under PMRPY, the government bears the entire contribution of the employer towards EPFO (12% of basic) for the employees with salary up to Rs 15000 per month. It will be paid for the first three years.

Objectives of the scheme

  • It aims to incentivize employers to increase the employment base of workers in the establishments.
  • Facilitating access to social security benefits of to all the employees with low incomes who prefer to receive a salary in cash.

The advantages of this Yojana are

  • Social security- With the employees coming under the ambit of the EPF, they get to enjoy social security benefits after they stop working. They are also protected under the labour laws as they are in the legal books of the company.
  • Employment- By paying a portion of the EPF, the govt encourages more employment opportunities. More jobs will be created as a result of this.
  • Expansion and growth - With more employees on board, the small companies will be encouraged to expand and grow and thus allow them to be competitive.
  • Increased tax net for the govt- More expansion and growth will result in a larger tax net for the government, allowing them to increase the tax revenue.

Problems arising due to the informalization of the workforce

  • The employees are deprived of social security benefits and lead a vulnerable life in absence of job security.
  • The economic disparity increases in society. Oxfam report says that in India the richest 1% own 58% of the total wealth.
  • Companies have no incentives to invest in innovation or skill improvements of employees.
    Hence, the products of the company lose competitiveness in the market.
  • There may not be a certain period assigned for the work. It leads to the exploitation of the workers: more work with less pay.


Currently, 5.5 lakh workers are being registered every month under the scheme of PMRPY. With increasing formalization, we can curb the exploitation of contract workers to a large extent. So far around 85 lakh jobs have been generated through this scheme. Thus, we can say that its performance has been satisfactory. Examples from our neighbours like Bangladesh and Vietnam show us that formalisation of small industries is necessary for being competitive on a global level. PMRPY has added about 30 lakh people to formal employment involving the expenditure of 500 crores since its emergence. If India wants to be an economic powerhouse, its unorganized sector needs to be strengthened and PMRPY has shown some light in this aspect.

Read 606 times Last modified on Saturday, 17 November 2018 12:02

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