As downturn bites, over 1 crore empty their PF accounts
It was money put aside for a rainy day. And, well, it’s pouring.
The Employees’ Provident Fund Organisation (EPFO) has confirmed that the number of people emptying their PF accounts — seen as a last resort in times of financial distress — has risen by a record 32 per cent in the financial year 2008-09, up from a mere 10 per cent increase the year before.
“The number of withdrawal applications filed across India crossed the 1 crore mark in 2008-09,” said K Chandramouli, central provident fund commissioner with EPFO, which manages the PF of 4.5 crore private sector employees. “The year before, it was 76.35 lakh.”
Most of the applications were filed between October 2008 and March 2009, as the effects of the downturn began to set in.
As layoffs began — about 5 lakh people lost their jobs between October and December 2008, according to a Labour Ministry report — those who had been riding the wave and taken loans for everything, from homes to luxury cars to vacations, were bowled a googly.
In Delhi and Mumbai, there has been a similar rise in the number of PF claims filed. In Delhi, the average number of applications filed a month rose from 30,000 between April and September 2008 to over 1 lakh between October 2008 and March 2009. Mumbai has seen an increase of 30,000 applications a month.