Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 3- Decline in women's work participation rate and possible causes of it.
Context
India is one of the few countries in the world where women’s work participation rates have fallen sharply — from 29 per cent in 2004-5 to 22 per cent in 2011-12 and to 17 per cent in 2017-18.
What could be the possible explanations for the decline?
- No consensus among economists: Trying to explain whether women are choosing to focus on domestic responsibilities or whether they are pushed out of the workforce has become a minor industry among economists.
- Can the quality of data be the explanation? Strangely, the one explanation we have not looked at is whether the declining quality of economic statistics may account for this trend.
- Our pride in the statistical system built by PC Mahalanobis is so great that we find it unimaginable that it could fail to provide us with reliable employment data.
- However, as challenges to economic statistics have begun to emerge in such diverse areas as GDP data and consumption expenditure, perhaps it is time to consider the unimaginable.
- Issue of data collection: Is the decline in women’s labour force participation real or is it a function of the way in which employment data are collected?
Anatomy of the decline in participation rates
- Driven by rural women: The anatomy of the decline in women’s work participation rates shows that it is driven by rural women.
- Data of the prime working-age group: In the prime working-age group (25-59)-
- Urban area data: Urban women’s worker to population ratios (WPR) fell from 28 per cent to 25 per cent between 2004-5 and 2011-12, stagnating at 24 per cent in 2017-18.
- Rural area data: However, compared to these modest changes, rural women’s WPR declined sharply from 58 per cent to 48 per cent and to 32 per cent over the same period.
- Among rural women, the largest decline seems to have taken place in women categorised as unpaid family helpers — from 28 per cent in 2004-5 to 12 per cent in 2017-18.
- This alone accounts for more than half of the decline in women’s WPR. The remaining is largely due to a drop of about 9 percentage points in casual labour.
- In contrast, women counted as focusing solely on domestic duties increased from 21 per cent to 45 per cent.
What are the explanations for this massive change?
- Data collection issue: It is the change in our statistical systems that drives these results.
- Change of workforce collecting data: The questionnaires through which the National Statistical Office (NSO) collects employment data have not changed, but the statistical workforce has, and the surveys that performed reasonably well in the hands of seasoned interviewers are too complex for poorly trained contract data collectors.
- How data is collected? The National Sample Surveys (NSS) do not have a script that the interviewer reads out. They have schedules that must be completed. The interviewer is trained in concepts to be investigated and then left to fill the schedules to the best of his or her ability.
- The NSS increasingly relies on contract investigators hired for short periods, who lack
- Need for redesigning the surveys: Do we need to return to the days of permanent employees or can we design our surveys to overcome errors committed by relatively inexperienced interviewers?
- A survey design experiment led by Neerad Deshmukh at the NCAER-National Data Innovation Centre provides an intriguing solution.
- In this experimental survey, interviewers first asked about the primary and secondary activity status of each household member, mimicking the NSS structure.
- They then asked a series of simple questions that included ones like, “do you cultivate any land?” If yes, “who in your household works on the farm?”
- Similar questions were asked about livestock ownership and about people caring for the livestock, ownership of petty business and individuals working in these enterprises.
- What was the result of survey experiment: The results show that the standard NSS-type questions resulted in a WPR of 28 per cent for rural women in the age group 21-59, whereas the detailed activity listing found a WPR of 42 per cent — for the same women.
- This is an easily implementable module that does not require specialised knowledge on the part of the interviewer.
Identifying the sectors from which women are excludes
- Missing the identification of sector: In our concern with ostensibly declining women’s work participation, we have missed out on identifying sectors from which women are excluded and more importantly, in which women are included.
- What data for men indicate? For rural men, ages 25-59, between 2004-5 and 2017-18, casual labour declined by about 6 percentage points.
- However, this decline is counterbalanced by regular salaried work which increased by 4 percentage points.
- Thus, it seems likely that men are exchanging precarious employment with higher-quality jobs.
- What data for women indicate? In contrast, women’s casual work has declined by 9 percentage points while their regular salaried work increased by a mere 1 percentage point.
- Moreover, the usual route to success, gaining formal education, has little impact on women’s ability to obtain paid work.
- The explanation for the disparity: Rural men with a secondary level of education have options like working as a postman, driver or mechanic — few such opportunities are open to women.
- It is not surprising that women with secondary education have only half the work participation rate compared to their uneducated sisters.
- Takeaway: The focus on employment for women needs to be on creating high-quality employment rather than getting preoccupied with declining employment rates.
Conclusion
It may be time for us to return to the recommendations of ‘Shramshakti: Report of National Commission on Self Employed Women and Women in the Informal Sector’ and develop our data collection processes from the lived experiences of women and count women’s work rather than women workers. Without this, we run the risks of developing misguided policy responses.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Growing difficulties for Iran amid sanctions and cooperation with China and Pakistan, and implications for India.
Context
The coronavirus pandemic creates fresh possibilities for cooperation between the West Asian nation and its neighbours.
Challenges faced by Iran
- Hardest hit by COVID-19 among the West Asian countries: Iran, the hardest-hit among the West Asian countries in the global pandemic, is on the front line of the battle against the coronavirus that causes the causes coronavirus disease, COVID-19.
- Healthcare reeling under combined load: With nearly 900 deaths and over 14,000 cases of infection, its health-care system is reeling under the combined effect of the pandemic and American sanctions.
- Possibility of social unrest resurfacing: The masses thronging the streets some weeks ago may have receded out of fear of both the coronavirus and the wrath of the regime, but there is a possibility of social unrest resurfacing if the government’s response to the spread of the virus is ineffective and shortages are exacerbated.
- Emergency funding from IMF: Iran has already approached the International Monetary Fund for $5-billion in emergency funding to combat the pandemic.
- Easing of some sanctions by the US: The U.S. Treasury had announced in end-February that it was lifting some sanctions on the Central Bank of Iran to facilitate humanitarian trade such as the import of testing kits for COVID-19. Clearly, Iran thinks this is inadequate.
Iran’s nuclear policy
- Iran to resumed nuclear activities: Following the U.S.’s decision to jettison the deal, Iran had announced that it would resume its nuclear activities but had agreed to respect the International Atomic Energy Agency (IAEA) inspections and enhanced monitoring as part of its obligations under the additional protocol.
- What were the conditions of JCPOA? The JCPOA limited Iran to enrich uranium only up to a 3.67% concentration and its stockpile to 300 kg of UF6 (corresponding to 202.8 kg of U-235), and further capped its centrifuges to no more than 5,060, besides a complete cessation of enrichment at the underground Fordow facility.
- It also limited Iran’s heavy water stockpile to 130 tonnes.
- Restriction on enrichment lifted by Iran: Since July 2019, Iran has lifted all restrictions on its stockpiles of enriched uranium and heavy water.
- It has been enriching uranium to 4.5%, beyond the limit of 3.67%.
- Moreover, it has removed all caps on centrifuges and recommenced enrichment at the Fordow facility.
- An increased stockpile of Uranium: As of February 19, Iran’s enriched uranium stockpile totalled 1,020.9 kg, compared to 372.3 kg noted in the IAEA’s report of November 3.
- IAEA’s second report: In a second report issued on March 3, the IAEA has identified three sites in Iran where the country possibly stored undeclared nuclear material or was conducting nuclear-related activities.
- The IAEA has sought access to the suspect sites and has also sent questionnaires to Iran but has received no response.
- Possibility of being on the collision course with the UNSC: The United Kingdom, France and Germany had invoked the JCPOA Dispute Resolution Mechanism (DRM) as early as in January this year.
- The threat to abandon the NPT: With the next Review Conference of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) set to take place in New York from April 27 to May 22, 2020, Iran’s threat to abandon the NPT if the European Union takes the matter to the UN Security Council (UNSC) may yet only be bluster, but the failure of the DRM process would certainly put Iran on a collision course with the UNSC.
- Support from China at UNSC: A sympathetic China, which holds the rotational presidency of the UNSC for March, should diminish that prospect, albeit only temporarily.
- Possibility of reversing the sanctions: As things stand, the terms of UNSC Resolution 2231, which had removed UN sanctions against Iran in the wake of the JCPOA, are reversible and the sanctions can be easily restored.
- That eventuality would prove disastrous, compounding Iran’s current woes.
- Possibility of Iran continuing its nuclear program: While recognising that cocking a snook at the NPT in the run-up to the NPT RevCon and the U.S. presidential elections will invite retribution, Iran may use the global preoccupation with the pandemic to seek a whittling down of sanctions and to continue its nuclear programme.
- More breathing time amid due to pandemic: In the event that the NPT RevCon is postponed due to the prevailing uncertainty, Iran may yet secure some more breathing time.
Iran’s ties with China and implications for India
- China- only major country to defy the US sanctions: Meanwhile, the U.S. continues to implement its “maximum pressure policy”. China remains the only major country that continues to defy U.S. sanctions and buy oil from Iran, apart from a small quantum that goes to Syria.
- The sale of oil to China, however, does little to replenish Iran’s coffers. China is eschewing payments in order to avoid triggering more sanctions against Chinese entities.
- Trilateral naval exercise: When seen in the context of the trilateral naval exercise between China, Iran and Russia in the Strait of Hormuz in the end of December 2019 codenamed “Marine Security Belt”, these developments suggest a further consolidation of Sino-Iran ties in a region of great importance to India.
- Inclusion of Pakistan in the exercise: Over time, this could expand into a “Quad” involving China’s “all-weather friend” Pakistan in the Indian Ocean and the northern Arabian Sea, with broader implications for India as well as the “Free and Open” Indo-Pacific.
Conclusion
- Iran’s foreign policy to remain unchanged: The first round of Iran’s parliamentary elections in February showed that the hardliners are firmly ensconced. The fundamental underpinnings of Iran’s foreign policy are likely to remain unchanged.
- Possibility of cooperation among neighbours: Yet, the rapid spread of the coronavirus in the region creates fresh possibilities for cooperation between Iran and its neighbours, if regional tensions are relegated to the back-burner.
- Laudable example by India: Prime Minister Narendra Modi’s initiative to develop a coordinated response to the pandemic in the South Asian Association for Regional Cooperation framework, indeed, sets a laudable example.
- Much depends on Iran’s willingness: Much though will depend on Iran’s willingness to rein in its regional ambitions and desist from interference in the domestic affairs of others.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Not much.
Mains level: Paper 2- Need to revive the SAARC to deal with the COVID-19 outbreak
Context
SAARC has become the ‘virtual’ platform through which leaders of the eight countries of our troubled region agreed to work together to combat unarguably the greatest immediate threat to the people: the COVID-19 health pandemic.
Success depends on India
- The success of the Modi-SAARC initiative will largely depend on India—the dominant power of the region, in every sense.
- Pakistan’s position may become marginal: Once New Delhi demonstrates that it has the capacity, the political willingness to institutionalise and to lead a mutually beneficial cooperative regime in the region, Pakistan’s “churlish” behaviour will become marginal to SAARC.
- Various international relations theorists view this as a function of “hegemonic stability”.
- Much needs to be done: Much more will need to be done by New Delhi to establish that the video conference was not a mere event, but the assertive expression of its new willingness to stabilise the region through cooperative mechanisms, for our common future.
- Rare opportunity: This is a moment thus of a rare opportunity for India to establish its firm imprimatur over the region, and to secure an abiding partnership for our shared destiny.
The genesis of SAARC
- SAARC was born at a moment of hope in the 1980s.
- An initiative by Zia Ur Rehman: The idea was initiated by one of the most inscrutable leaders of the region, General Zia Ur Rehman of Bangladesh, who, met many of the other leaders personally and dispatched special envoys to the capitals of the countries of the region.
- Dhaka’s persistence resulted in the first summit of the seven leaders of the region in 1985.
- Afghanistan joined in 2007.
- Not lived up to expectation: In the nearly 35 years of its existence, even its champions will concede however that SAARC has, to put it euphemistically, not lived up to the promise of its founder.
How the SAARC has performed?
- The dismal performance in the trade: South Asia is the world’s least integrated region; less than 5% of the trade of SAARC countries is within. A South Asian Free Trade Zone agreed on, in 2006, remains, in reality, a chimera.
- Moribund state: The last SAARC summit, scheduled to be held in Islamabad in November 2016, was postponed after the terrorist attacks in Uri; none has been held since then, and until Mr. Modi’s initiative, no major meeting had been planned.
- Marginal in our collective consciousness: A quick look at some of the questions posed in the Lok Sabha and Rajya Sabha on SAARC, in the last years, suggest that Indian MPs seek answers on why India is still a member of SAARC and on the strength of other organisations such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) that India is engaged with.
- Thus SAARC had become almost marginal to our collective consciousness.
The fadeout and revival of SAARC
- India-Pakistan tension: Clearly, most of the smaller states and external players believe that the India-Pakistan conflict has undermined SAARC.
- How Pakistan derails the initiatives? Bilateral issues cannot be discussed in SAARC but since the organisation relies on the principle of unanimity for all major decisions, Pakistan has often undermined even the most laudable initiative lest it gives India an advantage.
- Relative gains by India are more important for Pakistan than the absolute gains it secures for itself.
- Pakistan’s use of terror: For India, Pakistan’s use of terror as an instrument of foreign policy has made normal business impossible.
- Need of the revival to deal with the COVID-19: There is no doubt that the impact of COVID-19 will be unprecedented, in terms of those it targets and the way we live. It is too early to judge the consequences , but it will take years for the world to return to the old and familiar.
- Strategies to cope with this new insidious, scheming and diabolic strain of the coronavirus have to be dynamic and ad hoc.
- Two principles to deal with the epidemic: Containment and the possible prevention of community transmission are the only two principles that are firmly tested.
- If community transmission occurs and cannot be contained, the consequences will be calamitous.
- Time to act together: This is indeed a time for SAARC and the experts of the region to think and act together and India can lead this effort.
Conclusion
It is evident that Mr Modi is an out-of-the-box lateral thinker, especially on foreign policy. More importantly, the tragedy of COVID-19 may provide an opportunity for India to demonstrate its compassionate face to secure a region at peace with itself. India cannot afford to not to harvest this opportunity, after having sowed the seeds of a New South Asia.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Discretionary powers of Governor
Mains level: Speaker vs Governor Tussle
With the Supreme Court set to hear on a plea seeking a directive to the government in Madhya Pradesh to take a floor test “within 12 hours”, the spotlight is back on the legal debate on the powers of the Governor and the Speaker under the Constitution.
Primacy to Floor Test
- Since 2014, the legal-political tussle between the Governor and Speaker has prompted the Supreme Court’s intervention in three major instances — in the Arunachal Pradesh and Uttarakhand cases in 2016 and in the Karnataka case in 2019.
- In all three cases, the court emphasised the primacy of the floor test.
- In the Arunachal and Uttarakhand cases, the House was in suspended animation as President’s Rule had been imposed.
- The Supreme Court ordered that the House be summoned and a floor test held to end the impasse.
- But Article 212 of the Constitution bars courts from inquiring into proceedings of the Legislature.
Earlier instances
- Earlier, the Sarkaria Commission had recommended that, if the CM neglects or refuses to summon the Assembly for a floor test, the Governor should summon the Assembly.
- If the House is adjourned sine die or prorogued without holding a floor test, then all options are open before the Governor.
- However, when the House is in session, the question of whether the court can direct the Speaker to hold a floor test is yet to be settled.
- In 1998, in the Jagadambika Pal case, the SC had ordered a composite floor test when the House was in session.
- However, in that case, there were two claimants to the chief minister’s post.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Short selling of stocks
Mains level: Stock prices volatility: Various causative factors
The stock exchanges have clarified that the Securities and Exchange Board of India (SEBI) was not considering any proposal regarding a ban on short selling to curb the ongoing volatility and equity sell-off.
What is Short Selling?
- Short-selling allows investors to profit from stocks or other securities when they go down in value.
- In order to do a short sale, an investor has to borrow the stock or security through their brokerage company from someone who owns it.
- The investor then sells the stock, retaining the cash proceeds.
- The short-seller hopes that the price will fall over time, providing an opportunity to buy back the stock at a lower price than the original sale price.
- Any money left over after buying back the stock is profit to the short-seller.
When does short-selling makes sense?
- Most investors own stocks, funds, and other investments that they want to see rise in value.
- Over time, the stock market has generally gone up, albeit with temporary periods of downward movement along the way.
- For long-term investors, owning stocks has been a much better bet than short-selling the entire stock market.
- Sometimes, though, you’ll find an investment that you’re convinced will drop in the short term (as in case of COVID 19 outbreak).
- In those cases, short-selling can be the easiest way to profit from the misfortunes that a company is experiencing.
- Even though short-selling is more complicated than simply going out and buying a stock, it can allow making money when others are seeing their investment portfolios shrink.
The risks of short-selling
- Short-selling can be profitable when one makes the right call, but it carries greater risks than what ordinary stock investors experience.
- When we buy a stock, the most we can lose is what you pay for it. If the stock goes to zero, we suffer a complete loss, but will never lose more than that.
- By contrast, if the stock soars, there’s no limit to the profits one can enjoy. With a short sale, however, that dynamic is reversed.
Example:
- For instance, say you sell 100 shares short at a price of $10 per share. Your proceeds from the sale will be $1,000.
- If the stock goes to zero, you’ll get to keep the full $1,000. However, if the stock soars to $100 per share, you’ll have to spend $10,000 to buy the 100 shares back.
- That will give you a net loss of $9,000 — nine times as much as the initial proceeds from the short sale.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Various diseases mentioned and their vaccines
Mains level: Epidemics and their containment
India has witnessed widespread illnesses and virus outbreaks in parts of the country, including the SARS outbreak between 2002 and 2004. However, statistics show that they were nowhere as widespread as the COVID-19 that has now reached almost every part of the country and almost every country in the world.
What is an Epidemic?
- The WHO defines epidemics as “the occurrence in a community or region of cases of an illness, specific health-related behaviour, or other health-related events clearly in excess of normal expectancy.
- The community or region and the period in which the cases occur are specified precisely.
- The number of cases indicating the presence of an epidemic varies according to the agent, size, and type of population exposed, previous experience or lack of exposure to the disease, and time and place of occurrence.
- Epidemics are characterized by the rapid spread of the specific disease across a large number of people within a short period of time.
Epidemics in India
- Many Indian citizens born at the start of the 21st century have not fully witnessed or experienced circumstances surrounding the mass outbreak of epidemics.
- This is not to say however, that as a nation, India is completely unfamiliar with dealing with epidemics and public health crises, some with exceptional success such as:
1915-1926 — Encephalitis lethargica
- Encephalitis lethargica, also known as ‘lethargic encephalitis’ was a type of epidemic encephalitis that spread around the world between 1915 and 1926.
- The disease was characterized by increasing languor, apathy, drowsiness and lethargy and by 1919, had spread across Europe, the US, Canada, Central America and India.
- It was also called encephalitis A and Economo encephalitis or disease.
- Approximately 1.5 million people are believed to have died due to this disease.
1918-1920 — Spanish flu
- This epidemic was a viral infectious disease caused due to a deadly strain of avian influenza.
- The spread of this virus was largely due to World War I which caused mass mobilization of troops whose travels helped spread this infectious disease.
- In India, approximately 10-20 million people died due to the Spanish flu that was brought to the region a century ago, by Indian soldiers who were part of the war.
1961–1975 — Cholera pandemic
- Vibrio cholerae, one type of bacterium, has caused seven cholera pandemics since 1817.
- In 1961, the El Tor strain of the Vibrio cholerae bacterium caused the seventh cholera pandemic when it was identified as having emerged in Makassar, Indonesia.
- In a span of less than five years, the virus spread to other parts of Southeast Asia and South Asia, having reached Bangladesh in 1963 and India in 1964.
1974 — Smallpox epidemic
- According to WHO, smallpox was officially eradicated in 1980. The infectious disease was caused by either of the two virus variants Variola major and Variola minor.
- Although the origins of the disease are unknown, it appears to have existed in the 3rd century BCE.
- This disease has a history of occurring in outbreaks around the world and it is not clear when it was first observed in India. India was free of smallpox by March 1977.
1994 — Plague in Surat
- In September 1994, pneumonic plague hit Surat, causing people to flee the city in large numbers. Rumours and misinformation led to people hoarding essential supplies and widespread panic.
- This mass migration contributed to the spread of the disease to other parts of the country. Within weeks, reports emerged of at least 1,000 cases of patients afflicted with the disease and 50 deaths.
2002-2004 — SARS
- SARS was the first severe and readily transmissible new disease to have emerged in the 21st century.
- In April 2003, India recorded its first case of SARS, severe acute respiratory syndrome, that was traced to Foshan, China.
- Similar to COVID-19, the causative agent of SARS was a type of coronavirus, named SARS CoV that was known for its frequent mutations and spread through close person-to-person contact and through coughing and sneezing by infected people.
2014-2015 — Swine flu outbreak
- In the last few months of 2014, reports emerged of the outbreak of the H1N1 virus, one type of influenza virus, with states like Gujarat, Rajasthan, Delhi, Maharashtra and Telangana being the worst affected.
- By March 2015, according to India’s Health Ministry, approximately 33,000 cases had been reported across the country and 2,000 people had died.
2018 — Nipah virus outbreak
- In May 2018, a viral infection attributed to fruit bats was traced in the state of Kerala, caused by the Nipah virus that had caused illness and deaths.
- The spread of the outbreak remained largely within the state of Kerala, due to efforts by the local government and various community leaders who worked in collaboration to prevent its spread even inside the state.
- Between May and June 2018, at least 17 people died of Nipah virus and by June, the outbreak was declared to have been completely contained.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Herd Immunity
Mains level: Coronovirus outbreak and its mitigation
As Europe was declared the epicentre of the novel coronavirus outbreak last week, Britain announced a different strategy to tackle the situation. Officials said that Britain would contain the spread of the virus but would not suppress it completely to build up a degree of ‘herd immunity’.
Herd Immunity
- Herd immunity is when a large number of people are vaccinated against a disease, lowering the chances of others being infected by it.
- When a sufficient percentage of a population is vaccinated, it slows the spread of disease.
- It is also referred to as community immunity or herd protection.
- The decline of disease incidence is greater than the proportion of individuals immunized because vaccination reduces the spread of an infectious agent by reducing the amount and/or duration of pathogen shedding by vaccines, retarding transmission.
- The approach requires those exposed to the virus to build natural immunity and stop the human-to-human transmission. This will subsequently halt its spread.
Can it work?
- Globally, this strategy has been criticized.
- COVID-19 is a new virus to which no one has immunity. More people are susceptible to infection.
- The goal seems to have been delaying urgent action to allow an epidemic to infect large numbers of people.
- To combat COVID-19, there is an urgent need to implement social distancing and closure policies.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: Unnat Bharat Abhiyan 2.0
Mains level: Various initiaitves for rural transformation
The Union Minister for Human Resource Development has informed Lok Sabha about the progress of the Unnat Bharat Abhiyan (UBA).
Unnat Bharat Abhiyan 2.0
- Unnat Bharat Abhiyan 2.0 is the upgraded version of Unnat Bharat Abhiyan 1.0.
- The scheme is extended to all educational institutes; however, under UBA 2.0 Participating institutes are selected based on the fulfilment of certain criteria.
About UBA
- It is a flagship programme of the Ministry of HRD, which aims to link the Higher Education Institutions with a set of at least 5 villages so that these institutions can contribute to the economic and social betterment of these village communities using their knowledge base.
- It is a significant initiative where all Higher Learning Institutes have been involved for participation in development activities, particularly in rural areas.
- It also aims to create a virtuous cycle between the society and an inclusive university system, with the latter providing knowledge base; practices for emerging livelihoods and to upgrade the capabilities of both the public and private sectors.
- Currently under the scheme UBA, 13072 villages have been adopted by 2474 Institutes.
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Note4Students
From UPSC perspective, the following things are important :
Prelims level: EPS Scheme
Mains level: Scope and benefits of EPS
The Union Ministry of Labour & Employment has informed about the total enrollments under EPS.
Employees Pension Scheme (EPS)
- EPS is a social security scheme that was launched in 1995 and is facilitated by EPFO.
- The scheme makes provisions for pensions for the employees in the organized sector after retirement at the age of 58 years.
- Employees who are members of EPFO automatically become eligible for EPS.
- Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
- EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
- Of the employer’s share of 12 %, 8.33 % is diverted towards the EPS.
Features of the 2020 Amendment
- EPS pensioners will get normal pension even after getting a reduced pension due to commutation.
- On retirement, if the employee opts for commutation of pension, a portion is paid as a lump sum based on the commutation factor while on the balance the pension begins.
- In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension.
- In such a case, the amount of pension will be lower than the amount of pension without any commutation.
- The amendment seeks to restore the original amount of pension as per the commutation table, after 15 years equal to the same amount as it would have been without commutation.
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