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By:

Sumit Ranjan Das

21 August 2024 at 4:08:59 pm

EPFO’s Big Wage-Band Reset

Twelve years is a long time for a wage ceiling to remain unchanged. The last revision came in September 2014, when the limit was raised from Rs.6,500 to Rs.15,000. Last week, the Union Cabinet approved another increase, taking the ceiling to Rs.25,000 a month with effect from 17 September 2026. The government’s estimate is that more than 51 lakh additional employees will come within mandatory EPFO coverage as a result of the change. For employers and payroll professionals, however, the...

EPFO’s Big Wage-Band Reset

Twelve years is a long time for a wage ceiling to remain unchanged. The last revision came in September 2014, when the limit was raised from Rs.6,500 to Rs.15,000. Last week, the Union Cabinet approved another increase, taking the ceiling to Rs.25,000 a month with effect from 17 September 2026. The government’s estimate is that more than 51 lakh additional employees will come within mandatory EPFO coverage as a result of the change. For employers and payroll professionals, however, the headline number is only the starting point. The more important questions are who will be covered, which wages will be taken into account and how the revised provisions will be implemented. Wage Ceiling The existing wage ceiling of Rs.15,000 a month is being raised by Rs.10,000, or 66.7 percent, to Rs.25,000. The change takes effect from 17 September 2026 and marks the first revision since September 2014. The government expects more than 51 lakh additional employees to be covered. Estimated expenditure is about Rs.56,696 crore over five years, while annual government outgo is expected to rise to approximately Rs.11,339 crore. The standard contribution remains 12 percent each from the employee and employer, subject to applicable provisions. The Cabinet said the decision will expand access to provident-fund savings, pension protection under the Employees’ Pension Scheme (EPS) and insurance protection under the Employees’ Deposit Linked Insurance Scheme (EDLI), in accordance with the applicable scheme provisions. The wage ceiling is not merely an administrative threshold. It determines the point at which mandatory EPF coverage applies under the existing framework. At present, a fresh employee joining employment at wages above Rs.15,000 a month is not automatically brought within mandatory EPF coverage and may remain outside mandatory provident-fund, pension and associated insurance protection, subject to applicable statutory provisions. The revised ceiling will bring a substantial section of employees earning between Rs.15,000 and Rs.25,000 within the mandatory coverage framework. The government has also quantified the fiscal impact. The estimated expenditure is about Rs.56,696 crore over five years, while annual government outgo is expected to rise to approximately Rs.11,339 crore, compared with existing annual budgetary support of about Rs.10,250 crore. The Labour Ministry has linked the revision to sustained wage growth, rising incomes and the continued expansion of formal employment since the previous revision in 2014. Payroll Illustration Consider an employee earning Rs.22,000 a month who becomes subject to mandatory coverage under the revised ceiling. At the standard 12 percent contribution rate, if the full eligible wage is used as the contribution base, the employee’s contribution would rise from Rs.1,800 to Rs.2,640 a month, while the employer’s contribution would similarly rise from Rs.1,800 to Rs.2,640. Total monthly contributions would therefore increase from Rs.3,600 to Rs.5,280 — a combined increase of Rs.1,680. However, this should not be treated simply as Rs.1,680 of additional employee savings. Contributions are allocated between EPF and EPS components as prescribed, with the EPF component accumulating in the employee’s account and the EPS component providing pension benefits subject to scheme conditions. The Rs.22,000 example is illustrative, not a universal payroll formula. The final treatment of wage components, existing employees in this band, EPS allocation and transitional matters will depend on the statutory notification and EPFO implementation instructions. For payroll professionals, the immediate task is to assess the operational impact. Key questions include the effective date for existing employees and new joiners, which wage components will count towards PF, whether the 10 percent concessional rate for notified establishments will continue, how the revised ceiling will interact with EPS pensionable wages, and what changes will be required in payroll systems. The Cabinet approval establishes the policy decision; the formal Gazette notification and EPFO instructions will determine how it is translated into payroll processes. The revised ceiling is the first increase since September 2014 and is expected to bring more than 51 lakh additional employees, particularly those in the Rs.15,000-Rs.25,000 wage band, under mandatory EPFO coverage. For them, the change can expand access to provident-fund savings, EPS pension and EDLI insurance, subject to scheme provisions. For employers, it means reviewing payroll costs, employee data, eligible wage components, contribution calculations and compliance systems. The government has described the move as part of efforts to extend statutory social security and strengthen formal employment. The policy has been announced. For payroll professionals, the next chapter is implementation. (The writer is a Cost and Management Accountant and founder of TaxoDas. Views personal

Can India Democratise Its Science?

May 7
4 min read

What does it mean to democratise science? At its simplest, it means widening participation, ensuring that the opportunity to ask meaningful questions, access resources, and contribute to knowledge is not confined to a narrow set of institutions or individuals. It means that scientific talent, wherever it exists, can find expression. It also means that public investment in science serves not only excellence at the top but also capacity across the system.


India’s scientific potential is not confined to a handful of elite campuses. It resides in hundreds of universities and thousands of colleges that educate the vast majority of students. If these institutions remain peripheral to the research enterprise, the country risks leaving much of its intellectual capital untapped. Therefore, democratizing science is not merely a question of fairness. It is a question of national capability.


Recent institutional developments, including the creation of the Anusandhan National Research Foundation (ANRF), explicitly recognize this ambition. Yet a closer look at how scientific proposals are evaluated suggests that the path toward democratisation remains incomplete.


Uneven Funding

Across funding agencies, evaluation processes are often perceived as conservative and insufficiently attentive to structural inequities. Review panels, though composed of accomplished scholars, can draw from a relatively narrow pool of experts, mainly from well-known institutions. While this continuity brings experience, it can also reinforce existing ideas about what counts as “good science,” making it harder for unconventional or context-driven ideas to be recognized.


A growing concern within India’s research ecosystem is that a disproportionate share of funding continues to flow to already well-endowed centrally funded institutions such as the IITs, AIIMS, NITs, and central universities. These institutions have earned their stature and require sustained investment, particularly in a country where overall R&D spending remains stuck at just 0.6 to 0.7 percent of GDP - far below global peers like China and the United States. Yet the issue is not merely how much India spends on research, but how that spending is distributed. Recent budget allocations underscore this concentration: IITs received over Rs. 11,000 crore, central universities more than Rs. 16,000 crore, NITs nearly Rs. 5,700 crore, and centrally funded medical institutions roughly Rs. 15,000 crore combined, while the UGC, which supports a much broader university ecosystem, received comparatively modest funding. The question is not whether elite institutions deserve support, but whether India has a transparent framework to assess the broader returns on public investment across different categories of institutions.


At present, such a framework is largely absent. There is no widely accessible, institution-wise dataset linking grant allocation to outcomes such as publications, patents, technology transfer, regional development, or talent retention. In the absence of such data, India risks debating science policy without adequate evidence.


Over the past two decades, major centrally funded institutional systems have accounted for roughly two thirds of India’s research publications, reflecting both their capacity and the concentration of resources within them. Meanwhile, reports from bodies such as NITI Aayog continue to highlight persistent constraints in state universities, including limited infrastructure, difficulty attracting skilled researchers, and restricted access to advanced equipment. These institutions educate most India’s students but remain underrepresented in research funding and output.


Structural Paradox

This creates a structural paradox. India spends relatively little on research and development overall, and within that limited pool, resources are unevenly distributed. The result is not merely scarcity, but what may be described as “concentrated scarcity.”


The implications for democratizing science are significant. When researchers from less endowed institutions compete with those from well-funded centers using identical metrics such as the h-index, citation counts, and academy fellowships, the playing field is inherently uneven.


Beyond the evaluation of scientific proposals, similar disparities are visible across other facets of funding and recognition, including awards, bilateral grants, fellowships, and access to major research facilities. As a result, talented students, particularly those supported by independent fellowships, often gravitate toward well-funded institutions and universities.


There is also a persistent inconsistency in evaluation logic. Proposals with strong translational potential are sometimes questioned for a lack of novelty, while fundamental research proposals are asked to demonstrate immediate application. If democratization is the goal, reform must go beyond incremental adjustments.


While no country has fully solved the problem of unequal access in research ecosystems, international experience shows that thoughtful policy design can widen participation without diluting excellence. The United States has used targeted funding programmes to reduce regional disparities, while the European Union and the United Kingdom have broadened definitions of merit through narrative evaluations and widening-participation schemes. Germany’s emphasis on stable institutional funding demonstrates that equity improves when universities are not entirely dependent on competitive grants, and China’s large-scale expansion of research funding shows the importance of both scale and distribution. Brazil, meanwhile, has strengthened participation through decentralised state-level research foundations. The broader lesson is clear: democratization in science and research does not emerge automatically from open competition alone; it requires deliberate structural design.


In the Indian context, several reforms are worth serious consideration. First, contextualized evaluation that assesses research relative to available resources, institutional constraints, and teaching responsibilities can better capture ingenuity under limitations. Second, dedicated funding streams for less endowed institutions can broaden participation without lowering standards. Third, narrative curricula vitae and partially blind review processes can reduce overreliance on institutional prestige.


Equally important are capacity-building measures such as shared infrastructure, technical staff support, and regional research clusters.


Transparency must be central to reform. Funding agencies, including ANRF, should publish annual, institution-wise dashboards on grant allocation, proposal success rates, review panel diversity, and long-term outcomes.


India’s research and development spending may need to rise. However, unless the architecture of opportunity, including who gets funded, how they are evaluated, and what ecosystems support them, is rethought, increased spending alone may simply amplify existing inequalities. The question is not whether India can afford to democratize science. It is whether it can afford not to.


(The writer is an ANRF Prime Minister Professor at COEP Technological University, Pune, and former Director of the Agharkar Research Institute, Pune. Views personal.)

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