Aatmanirbhar Bharat Rozgar Yojana (2020): An Analysis of Objectives and Impact

Aatmanirbhar Bharat Rozgar Yojana (2020): An Analysis of Objectives and Impact

Policy Update
Anjana M

Background

The Atmanirbhar Bharat Rozghar Yojana is a government program designed to encourage employers to create new jobs, provide social security benefits, and compensate workers who lost their jobs during the COVID-19 pandemic. Launched under the Ministry of Labour and Employment, it came into effect on 1 October 2020 as a part of the Atmanirbhar Bharat package 3.0. Under the scheme, the Government of India, for two years, is crediting both the employee’s share (12% of wages) and the employer’s share (12% of wages) of the contribution payable or only the employee’s share, depending on the employment strength of the employees.

This scheme intends to reduce the financial burden on employers and encourages them to hire more workers. Employers up to Rs. 15,000 per month are covered by the scheme, which applies to businesses registered with the Employees’ Provident Fund Organisation (EPFO). The government is providing fiscal stimulus of more than Rs. twenty-seven lakh crore as part of the Aatmanirbhar financial package. The Aatmanirbhar Bharat package comprises various long-term schemes/programs/policies for making the country self-reliant and creating employment opportunities.

Functioning

 The scheme commenced on 1st October 2020 and remained open for registration of eligible employers and new employers up to 30th June 2021, which was later extended to 31st March 2021. The government will pay the subsidy for the two years from the date of registration

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 Source: PIB Press Release PRID: 1843402, Ministry of Labour and Employment

Nature and Scale of Incentive

  • Incentive for Employers of EPFO-Registered Establishments & their New Employees with Monthly Wages Less Than Rs.15000/- 
  • The incentive is in the form of payment for both the employee’s and employer’s contribution, i.e., 24% of wages for new employees in establishments employing up to 1000 employees and 12% of wages r/o for new employees in establishments employing more than 1000 employees.
  • The incentive is payable by the Central Government by an upfront credit in the UANs of the new employees.

Eligibility Criteria and Scope

  •  Establishments already registered before the commencement of this Scheme shall have to employ, over and above the reference base, a minimum of two new employees (if the reference base of employees is less than or equal to 50) and a minimum of five new employees (if the reference base of employees is more than 50) 
  • For new establishments getting covered & registered under the EPF & MP Act, 1952, from any date during the validity period of this scheme from 01.10.2020 to 30.06.2021, the reference base of employees shall be treated as zero, and benefits can be availed for all new eligible employees. 
  • “New employee” means any employee drawing EPF Wages less than Rs 15000 per month Who was not working in any establishment and did not have a Universal Account Number before 01st October, 2020, and joins employment in any establishment on or after 01.10.2020 up to 30.06.2021, and who is allotted an Aadhaar-validated UAN.
  • Any EPF member, already allotted a UAN, who exited from employment between 01.03.2020 and 30.09.2020 from any establishment, such date of exit being recorded in the UAN, and who joins any EPFO-registered establishment on or after 01.10.2020 and up to 30.06.2021. 

Procedures

  • The employer in relation to any eligible establishment, shall first register the establishment under this Scheme, disclosing the reference base of employees through a link in the Employer’s login on EPFO Unified Portal. 
  • Before registration of the establishment under this Scheme, the employer shall ensure that an updated ownership return is already filed with EPFO. 
  • Before taking any employee in employment, the employer shall ensure to obtain a declaration as to previous membership of Employees Provident Fund Scheme, 1952 and Employees’ Pension Scheme, 1995, EPF member a/c number/UAN in respect of such previous membership as required under Para 34 of the EPF Scheme, 1952 and Para 24 of the EPS, 1995 and retain such declaration.
  • The employer of an eligible establishment shall register new employees under this Scheme during the period from 01.10.2020 to 31.03.2022.
  •  The employer, in relation to any eligible establishment, shall file one Electronic Challan cum Return (ECR) in respect of all employees for each wage month with respect to new employees in a way that leads to an increase in benefits. Any revision/correction/modification in such ECR shall not be allowed for claiming any enhanced benefits at any future date. 
  • The ECR for any wage month for claiming the benefits under this Scheme has to be filed by the eligible establishment not later than 60 days after the close of that wage month. In case such ECR for any wage month is filed beyond the due date specified in Para 38 of the EPF Scheme, 1952, but within 60 days of the close of the wage month, the liability of interest due u/s 7Q of the EPF& MP Act, 1952, on such belated remittances shall be borne by the employer.
  • That the benefit received from the Central Government under this Scheme shall not be liable to be booked as expenditure incurred by the establishment or employer for claiming or receiving any benefit/ exemption / rebate/concession/relief under any law
  •  Once ECR is uploaded by an employer eligible for benefits, then the challan will separately show the amount of employees’ and employers’ contribution in respect of new employees due from the Central Government under this Scheme and the amount payable by the employer. 
  • The employer has to remit the payment due from him as reflected in the Challan as noted above and completed the process of ECR filing.
  •  The Central Government benefit due under this Scheme in respect of new eligible employees will be credited upfront in the Aadhaar-seated UAN of new employees by the EPFO from funds allocated by the Central Government. 
  • Wherever an employer has filed ECR for the wage months prior to deployment of the facility for registration under this scheme, benefits due under this scheme, which are already remitted through ECR, will be reimbursed to the employer for the employer’s share by way of future adjustments against the employer’s share of contribution. 
  • The employee’s share of the benefit of the respective new eligible employee will also be adjusted in their UANs.

Impact

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Source: Ministry of Labour and Employment

  • A total of 82,027 establishments involving a total of 21,99,852 employees have availed the benefit of Rs. 947 crore. This includes 18,78,771 new employees and 3,21,081 employees who had lost their jobs during the pandemic and have been re-employed as of 30.06.2021. (www.epfindia.gov.in)
  •  As of 30.03.2022, a total of 54.75 lakh employees have benefited under the scheme. This includes 48.76 lakh new joiners and 5.98 lakh employees who had lost their jobs during the pandemic and have rejoined as EPF members. (PIB,)
  •  ABRY targeted the lower-income formal sector by focusing on employees earning up to Rs. 15,000 monthly. This demographic represented the most vulnerable workers during the pandemic and offered the largest potential for formal sector growth.
  • The scheme’s success in supporting over 60 lakh beneficiaries demonstrates strong market demand for employment support during recovery. The close alignment between scheme enrollments and final beneficiary numbers reflects effective implementation and sustained employment relationships.
  • The participation of 1.50 lakh establishments across diverse sectors indicates broad adoption, suggesting the scheme’s design successfully appealed to employers across different industries and business sizes.
  • ABRY’s impact on business cash flow was substantial, with employers saving 24% of wages on new hires for two years. This relief enabled many businesses to maintain or expand their workforce sooner than possible without government support.
  • MSMEs, or micro, small, and medium-sized businesses, were crucial in obtaining ABRY benefits. Their high participation rate demonstrates the scheme’s applicability to the most employment-sensitive industry in India
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Source:  PROJECT REPORT THE ATMANIRBHAR BHARAT ROJGAR YOJANA, JIGYASHA CHOUHAN, 23-03-2025

Emerging Issues

Despite its benefits, the scheme’s efficacy and reach were constrained by a number of

Issues:

  • Full participation was hampered by small- and medium-sized employers’ ignorance, especially in Tier-II and Tier-III cities.
  • Numerous businesses encountered digital and documentation challenges, such as trouble registering on the EPFO portal, uploading necessary documents, and confirming employee eligibility.  
  • ABRY’s extension timeline modifications highlight the challenges of predicting optimal scheme duration during crisis periods. The original June 2021 deadline proved insufficient, necessitating a nine-month extension to March 2022.

Conclusion

Aatmanirbhar Bharat Rozgar Yojana was an important initiative from the Government of India during the COVID-19 period, when the whole world was tackling an immense existential crisis: job loss was severe due to prolonged lockdowns and restrictions. With India being a middle-income country with more than half of its population still working in the informal sector, it was essential for the government to take action immediately against massive job losses and economic downturn. The scheme became an incentive for employers to provide more employment opportunities, thereby reviving the job sector. 

Even though it was not free from hurdles due to a lack of awareness and a short timeline for registration, many people missed the opportunities. Even though COVID was over, its economic effects still exist. The government must ensure more job opportunities to tackle the huge unemployment rate evolving in the job market through more effective implementations of likely schemes.

References

About The Author: Anjana M is an undergraduate student at Miranda House, the University of Delhi, and a research intern at IMPRI.

Acknowledgment: The author sincerely thanks Ms. Aasthaba Jadeja and the IMPRI team for their valuable support.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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