Pradhan Mantri Garib Kalyan Yojana

By Abhishek Jain |Updated : April 20th, 2022

To deal with the economic distress caused due to the coronavirus pandemic and subsequent lockdown, the Finance Minister on 26th March 2020 has announced a slew of measures. Amid the announcements, she ensured that the Central govt will pay the Provident Fund of workers’ EPF contribution both employer and the employee (12% each) for the next three months. The Employee Provident Fund Organization (EPFO) is disbursing monthly pension to more than 65 Lakh pensioners every month under the Employees’ Pension Scheme, 1995.

Pradhan Mantri Garib Kalyan Yojana

Important Highlights

  • This will be applicable for establishments with up to 100 employees, where 90% of employees drawing less than Rs 15,000 salary.
  • EPFO regulations have been amendments to allow workers under EPFO to draw up to 75% of their non-refundable advance or 3 months of wages, whichever is lower.
  • This move will be benefiting 4.8 crore employees the govt.

Amid the coronavirus pandemic, some of the announcements made earlier by the Govt are:

  • Extension of tax deadlines
  • Easing minimum balance norms for a savings account
  • Increased the threshold of insolvency filing to Rs one crore from Rs one lakh.
  • To help fight the ongoing pandemic, an Economic Task Force has also been constituted to curb the menace on the ground level.
  • A Relief package is also announced PM Garib Kalyan Yojana.
  • To help the poor to fight the battle against the coronavirus pandemic, the Finance Minister has announced a relief package under the Pradhan Mantri Garib Kalyan Yojana on 26th March 2020.

Components of the Pradhan Mantri Garib Kalyan Package:

  1. Insurance scheme for health workers fighting COVID-19 in Government Hospitals and Health Care Centres including-
  • Safai karamcharis, ward-boys, nurses, ASHA workers, paramedics, technicians, doctors and specialists and other health workers would be covered by a Special insurance Scheme.
  • Any health professional, who while treating Covid-19 patients, meet with some accident, then he/she would be compensated with an amount of Rs 50 lakh under the scheme.
  • All government health centres, wellness centres and hospitals of Centre, as well as States, would be covered under this scheme approximately 22 lakh health workers would be provided insurance cover to fight this pandemic.

   b. Benefit to farmers: The first instalment of Rs 2,000 due in 2020-21 will be front-loaded and paid in April 2020 itself under the PM KISAN Yojana. It would cover 8.7 crore farmers.

   c. Cash transfers Under PM Garib Kalyan Yojana: Help to Poor: A total of 20.40 crores PMJDY women account holders would be given ex-gratia of Rs 500 per month for the next three months.

   d. Gas cylinders: Under PM Garib Kalyan Yojana, gas cylinders, free of cost, would be provided to 8 crore poor families for the next three months.

   e. Help to low wage earners in organised sectors: Wage-earners below Rs 15,000 per month in businesses having less than 100 workers are at risk of losing their employment. Under this package, the government proposes to pay 24 percent of their monthly wages into their PF accounts for the next three months. This would prevent disruption in their employment.

   f. Support for senior citizens (above 60 years), widows and Divyang: There are around 3 crore aged widows and people in Divyang category who are vulnerable due to economic disruption caused by COVID-19. The government will give them Rs 1,000 to tide over difficulties during the next three months.

   g. MNREGA Under PM Garib Kalyan Yojana, MNREGA wages would be increased by Rs 20 with effect from 1 April 2020. Wage increase under MNREGA will provide an additional Rs 2,000 benefit annually to a worker. This will benefit approximately 13.62 crore families.

   h. Self-Help groups: Women organised through 63 lakh Self Help Groups (SHGs) support 6.85 crore households. Limit of collateral-free lending would be increased from Rs 10 to Rs 20 lakhs.

   i. Other components of PM Garib Kalyan package-

  1. Organised sector: Employees’ Provident Fund Regulations will be amended to include Pandemic as the reason to allow the non-refundable advance of 75 percent of the amount or three months of the wages, whichever is lower, from their accounts. Families of four crore workers registered under EPF can take benefit of this window.
  2. Building and Other Construction Workers Welfare Fund: Welfare Fund for Building and Other Constructions Workers has been created under a Central Government Act. There are around 3.5 Crore registered workers in the Fund. State Governments will be given directions to utilise this fund to provide assistance and support to these workers to protect them against economic disruptions.
  3. District Mineral Fund : The State Government will be asked to utilise the funds available under District Mineral Fund (DMF) for supplementing and augmenting facilities of medical testing, screening and other requirements in connection with preventing the spread of CVID-19 pandemic as well as treating the patients affected with this pandemic.

    j. Some other measures to mitigate the pandemic:

  • As a measure to help the poor and downtrodden people affected by Covid-19 lockdown, 5 kg of rice or wheat will be provided under the Pradhan Mantri Garib Kalyan Yojana for the next three months.
  • This scheme is expected to benefit around 80 crore poor people spread across the country.

    What is Pradhan Mantri Garib Kalyan Yojana?

  • The Pradhan Mantri Garib Kalyan Yojana (PMGKY) was originally launched by PM Narendra Modi in 2015 as a scheme built with the objective of addressing poverty.
  • However, with the recent demonetization drive launched by the government to curb the spread of black money, an amendment has been made to the existing Income Tax Bill and the PMGKY has been made a part of the Taxation Laws (Second Amendment) Act, 2016.

 Quick Glance at the announced highlights: 

  • Insurance cover of Rs 50 Lakh per health worker fighting COVID-19 to be provided under Insurance Scheme
  • 80 crore poor people will get 5 kg of wheat or rice and 1 kg of preferred pulses for free every month for the next three months
  • 20 crore women Jan Dhan account holders to get Rs 500 per month for next three months
  • Increase in MNREGA wage to Rs 202 a day from Rs 182 to benefit 13.62 crore families
  • Ex-gratia of Rs 1,000 to 3 crore poor senior citizen, poor widows and poor disabled
  • Government to front-load Rs 2,000 paid to farmers in the first week of April under existing PM Kisan Yojana to benefit 8.7 crore farmers
  • Central Government has given orders to State Governments to use Building and Construction Workers Welfare Fund to provide relief to Construction Workers

Why these measures were necessary?

  • A nationwide lockdown was imposed to stop the endemic of coronavirus. This has led to losing earning opportunities of daily wage workers and informal sector entrepreneurs.
  • To alleviate the huge distress of those least equipped to bear the cost of staying home for the larger public interest, it was announced.
  • For economic agents – It is a crisis of liquidity. Unlike big businessmen or the salaried middle class, poor households and small businesses with no balance sheets, reserves, or bank balances. Every day’s loss of work for them means cutting down even basic consumption and catching in a debt trap.
  • Given the huge buffer stock of cereals and pulses with government, this becomes an effective way to dispose of excess stocks.


  • Ensuring a continuous supply of food and cooking gas to people
  • liquidation of cash to ensure easing of cash woes for the vulnerable sections of society
  • By utilizing the existing scheme's funding for the package is kept within the budget so as to retain control over the fiscal deficit and to ensure Fiscally prudent.
  • Preserving Financial resources for future relief packages to adapt with changing situation

Concerns and Challenges Ahead:

  • Inclusion and exclusion error- certain groups of the vulnerable section may be left out.
  • Implementation issues: People may find difficulties to draw money from their accounts as most of the population is not digitally sound. There is no system for the procurement of pulses in most states.
  • The cost of the lockdown due to COVID-19 in India is pegged at nearly 9 lakh crore Rupees. This is the 3rd shock that the informal economy faces, after demonetisation and GST. 
  • Modest cash transfer may not be enough considering the drying up of incomes for the vulnerable sections of society
  • This Package does not address the challenges being faced by Informal sectors especially in MSMEs and also other hard-hit sectors.

Way Forward:

  • Intervention by RBI is required like providing moratorium on interest payments, regulatory forbearance, ensuring easy access to credit and changing classification norms. 
  • Resources of State needs to be enhanced through some measures like
    • Releasing the pending dues owed by the centre to the state governments on account of GST compensation. 
    • Sharing the benefits from fall in Crude Oil Prices
    • Assisting state governments in raising finances from markets (by giving sovereign guarantees)
    • The Consulting States to ensure that supply chain, spread across multiple states, of essential commodities is not disrupted
  • Non-harvesting of crops, due to disruption caused by lockdown, can lead to price fall or wastage so States need to be financially supported (agriculture is a State subject)
  • Civil Society and Corporates need to pitch in during this crisis with their financial and human resources

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