Bowing to pressure, govt rolls back PF withdrawal rules: 10 key points

  • Agencies, Hindustan Times, Bengaluru
  • Updated: Apr 20, 2016 11:59 IST
Police personal lathi-charge during garment workers protesting the central government’s decision on withdrawal of provident funds. (Kashif Masood/HindustanTimes)

Under fire from political opponents and pressure from trade unions, the government withdrew on Tuesday its new rules on provident fund withdrawal after violent protests against the PF restrictions erupted in Bengaluru.

Thousands of garment factory workers in Bengaluru blocked traffic and set vehicles on fire on Tuesday to protest against changes in provident fund rules that are perceived to puncture the only social safety net for Indians.

Within hours of announcing the decision to withhold the rules till July 31, labour minister Bandaru Dattatreya declared that the proposed move has been rolled back.

Read more: Bengaluru violence forces rollback of restrictions on PF withdrawals

“We are cancelling the notification issued on February 10. The old system will continue,” he told a press conference in Hyderabad on Tuesday night.

Dattatreya said the employees, whenever they want, can withdraw employer’s contribution of 12%.

The decision marks the government’s second u-turn on changes to the pension fund. In March, the government withdrew a plan to tax EPF withdrawals after an outcry from salaried workers.

Here is all you need to know about the controversy:

1. Discontent has brewed ever since the government announced its decision in February to put curbs on withdrawal from the retirement fund, a major source of instant money for the five crore-odd PF subscribers.The new norms restricting 100% PF withdrawal by members out of job for more than two months were to come into effect from May 1. Every month, salaried individuals contribute 12% of their pay to the EPF account and the employer matches this.

2. Several labour unions including the RSS-affiliated Bharatiya Mazdoor Sangh have been demanding complete rollback of the decision.

In Bengaluru, thousands of garment factory workers launched protests on Monday against the government’s proposal, allegedly panicked by reports which said the new norms bar PF withdrawals completely. A massive strike by thousands of garment workers on Tuesday turned violent in Bengaluru, leading to burning of buses, as police caned and arrested many of them.

3. Police had to resort to lathicharge and fire teargas shells to disperse violent protesters.

4. Officials said about 25 policemen, including an Assistant Commissioner of Police, suffered injuries in the violence and they are undergoing treatment at a hospital. At least two Karnataka State Road Transport Corporation buses and one of Bengaluru Metropolitan Transport Corporation were set on fire.

5. Incidents of stone-pelting on buses and other vehicles were reported from different parts of Bengaluru such as Bannerghatta and Jalahalli cross, as also near the Electronics City, the hub of IT firms.

6. Traffic jams were reported at various entry and exit points in the city like Hosur Road, which leads to Electronics City and Tumkur Road, which has a large concentration of garment units.

7. Workers opposing amendment to Employees Provident Funds and Miscellaneous Provisions Act expressed fear that the new rule would take away their right over the employer’s contribution of provident fund till they attain 58 years. 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% of the employer’s contribution

8. Police even issued prohibitory orders banning assembly of more than 10 people across Bengaluru for three days from Wednesday after protests turned violent.

9. The decision to impose the ban was taken at a high-level meeting of top police officials, including Director General of Police Om Prakash, by state Home Minister G. Parameshwra to restore normalcy in the aftermath of violence and arson that rocked the city’s southern and northern suburbs since Monday.

10. The government’s rollback decision is expected to be ratified at a meeting next month of the central board of trustee of the Employees Provident Fund Organisation (EPFO), the government body which manages the funds.


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