New enrolments to the National Pension Scheme stood at 29,155 in June, its lowest since the payroll data since September, 2017 when the official payroll data computation began, suggesting a significant dip in hiring and not enough disposable income in hand as people preferred holding on cash as Covid-19 pandemic spread.
The month-on-month payroll data, computed by the ministry of statistics and programme implementation, showed contribution by new subscribers to the NPS fell by 33.5% in June at 29,155 compared to 43,888 in May this year. Drop stood at 56.5% from June 2019 when the new subscribers joining the scheme was 67,062.
The scheme has seen fall in subscriber base since April, 2020, when the nationwide lockdown rolled out from March 25 led to halt in most business activities.The new subscribers added to NPS in April stood at 64,647 while the average monthly addition to the scheme in the last financial year was over 61,000.
As per the data, new state government subscribers to NPS fell to a low of 20,222 in June compared to 34,695 in May and 27,185 in April. Even the new subscribers under the non-government category fell to 5396 in the month under consideration compared to 5788 in May and 25,533 in April.
While the government has maintained that the reported figures are likely to undergo significant revision in the next few months, two tax experts that ET spoke to said the outbreak of Covid-19 pandemic has hit the scheme hard.
“The government’s claim of employment generation has fallen flat as the data shows a significant drop in employment being generated in state governments during the pandemic,” one of them said requesting anonymity.
“Even the self-employed and non-government employees seem to be holding on to cash to avoid blocking money in any savings instrument,” the first expert said.
According to the second tax expert, who also spoke on the condition of anonymity, NPS has never taken off to another level and hence has been losing ground with more impact being seen on the scheme now.
“It is not a mandatory scheme for non-government employees, has an open-ended rate of return and its market penetration is very low. No doubt, Covid has impacted the cash flow and disposable income of the people and this is being reflected in the falling NPS subscription,” the second tax expert added.