NEW DELHI: The Centre feels that the recent decision to relax withdrawal norms for government employees from the General Provident Fund (GPF) will be a win-win situation for both the government and employees.
The move will boost the economy and also raise demand for consumer durables and housing, it felt.
The Centre had, on March 7, liberalised GPF rules in a big sop to government employees, by bringing about changes for withdrawals for education, obligatory expenses, illness and purchase of consumer durables. Government employees can now withdraw from the GPF for funding primary, secondary and higher education, covering all streams and institutions. Employees who have completed 10 years of service can withdraw against the earlier criterion of 15 years.
“These reforms may, in general, be taken as a reaffirmation of the mindset of the present Central Government and the prime minister of trusting the intention and basic honesty of purpose of the government employees, preventing undue harassment by cutting down the redtape, thereby making these withdrawals, that inevitably are availed at critical junctures or for imminent needs during the life of the government employee, easier and more financially beneficial for him,” the government said on Sunday.
The government said the country stood to gain from this move.
“Along with the benefits accruing to the government employees, the economy also stands to gain from these amendments. Demand for consumer durables and housing will get a boost with the larger and expedited withdrawals from GPF that the subscribers are projected to make with the implementation of these reforms. This will help these sectors at a time when bank credit off-take is low,” the Centre said.
It said withdrawals by subscribers will also be “fiscally positive” by reducing the interest on the funds that would otherwise have accumulated in the GPF accounts of the subscribers.
“The situation is hence a win-win one for both the government employee and the economy and is another reaffirmation of this government’s philosophy of Sabka Saath-Sabka Vikas,” the government statement said.
There were also amendments made regarding withdrawals related to housing, housing loan repayment, purchase of house site and renovations to houses. The permissible withdrawal of up to 90% of balance at credit was de-linked from the limits prescribed under Housing Building Advance (HBA) Rules and can be availed by an employee any time during his service.
Also, the present rule that subsequent to the sale of a house for which GPF withdrawal had been availed, the amount withdrawn had to be deposited back, was removed.