The Indian government has initiated certain labour reforms to enhance the social security and welfare aspects of the workman, which are leading to provide sustainable livelihoods for the population who are largely engaged in the informal economy. The ministry has taken steps for formulating labour codes falling under four heads, namely wages, industrial relations, social security & welfare, and occupational safety, health and working conditions, by amalgamating, simplifying, and rationalising the relevant provisions of the existing Central labour laws.
During FY2018-19 the ministry has also signed a memorandum of understanding with Italy for training and education in the fields of labour and employment. It has also approved a memorandum of understanding with Brazil, the Russian Federation, and South Africa, regarding cooperation in the social and labour sphere. The five countries are members of the BRICS association of major emerging national economies. The memorandum would facilitate member countries to share knowledge and also implement joint programmes on matters of labour and employment, social security and social dialogue. The interim budget presented mainly focuses on bridging the gender gap in education and skill development of the Indian workforce.
The following are the highlights of the interim budget 2019-20
Liberalisation of the new pension scheme
- The employee contribution has been kept intact and the government contribution has been increased to Rs7,000 per month from Rs3,500 per month and the ceiling of the pay has been increased Rs21, 000 per month from Rs10,000 per month.
- Minimum pension for every labourer has been fixed at Rs1,000 per month.
- In the event of death of a labourer during service, the amount to be paid by the Employees' Provident Fund Organisation (EPFO) has been enhanced to Rs6 lakh from Rs2.50 lakh.
Increase in the ceiling for payment of gratuity
- The ceiling for payment of gratuity has been raised to Rs20 lakh from Rs10 lakh.
- Increase in ceiling for Employee State Insurance Scheme
- The ceiling of ESI's eligibility cover has been increased to Rs21,000 from Rs15,000 per month.
Major boost to Anganwadi and Asha Yojana
- The key objective of the National Rural Health Mission is to provide every village in the country with a trained female community health activist under the Accredited Social Health Activist (Asha) Yojana. The health activist selected from the village, to be called ASHA, will be trained to work as an interface between the community and the public health system.
- In order to boost and empower self-help groups of women , the government has increased the honorarium by about 50% for all categories of workers under the Asha Yojana.
- The government has increased the honorarium by about 50% to all categories of workers under the Anganwadi Yojana which was started by the Indian government in 1975 as part of the Integrated Child Development Services program to combat child hunger and malnutrition.
Pradhan Mantri Shram-Yogi Maandhan
- The unorganised sector of the country contributes to nearly half of India’s gross domestic product (GDP). Even though the government has continued its efforts towards bringing down unemployment in the unorganised sector, the steps taken have not borne appreciable fruit.
- The interim budget has provisioned for a monthly pension of Rs3,000, to those 60 years of age and having monthly income up to Rs15,000, with a contribution of only Rs100 per month, by workers in the unorganised sector.
- The government will deposit equal matching share in the pension account of the worker every month. It is expected that at least 10 crore labourers and workers in the unorganised sector will avail of the benefit of the Pradhan Mantri Shram-Yogi Maandhan within the next five years, making it one of the largest pension schemes of the world.
Youth empowerment
- Youth is the most valuable segment of the population. Under the Pradhan Mantri Kaushal Vikas Yojana over 1 crore youth are being trained to help them earn a livelihood. The potential of youth has been harnessed through self-employment schemes including Micro Units Development & Refinance Agency Ltd (MUDRA), Start-up India and Stand-up India.
- Under Mudra Yojana over 15.56 crore loans have been disbursed amounting to Rs7.23 lakh crore.
- The interim budget provides for the establishment of a national programme on artificial intelligence (AI) in order to deliver the benefits of artificial intelligence and related technologies to the people, for which the government has identified nine priority areas. A national AI portal will be developed soon and the government will start a national centre for artificial intelligence and turn one lakh villages into digital villages in a bid to harness new age-technologies for citizens.
Income tax relief for the salaried tax payers
- The present rates of income tax to continue for FY2019-20 which has provided relief to small taxpayers, especially the middle class, salary earners, pensioners, and senior citizens.
- Further, the following proposal has been made in the interim budget:
- Individual taxpayers having a taxable annual income up to Rs5,00,000 will get full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having a gross income up to Rs6,50,000 may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc.
- In fact, with additional deductions such as interest on home loan up to Rs2,00,000, interest on education loans, national pension scheme contributions, medical insurance, and medical expenditure on senior citizens, persons having even higher income will not have to pay any tax.
- Standard deduction has been raised to Rs50,000 from Rs40,000. This will provide additional tax benefit of Rs4,700 crore to more than 3 crore salary earners and pensioners.
- Income tax is being exempted on notional rent on a second self-occupied house.
(Both CS Nitin Bohara and CS Swapniil Sharma work at Vinod Kothari & Co)
