The Centre on Wednesday announced a 2 per cent reduction in the statutory provident fund contribution of both the employer and the employee in establishments covered by the Employee Provident Fund Organisation for the next three months.

An estimated Rs 6,750 crore would be the additional liquidity at the hands of the employer and the employee over the three-month period.

Finance minister Nirmala Sitharaman announced the contribution of employer and employee to the employee provident fund will be reduced to 10 per cent from 12 per cent for the next three months, the objective being more income at the hand of the employee and liquidity support for the employer.

The usefulness of the move, aimed at easing liquidity at the hands of both the employer and the employee amid the lockdown, would be limited, feels industry observers.

However, for central and state public sector undertakings covered by the EPFO, the employer’s contribution will continue to remain at the statutory level of 12 per cent.

This reduction will also not cover those employees who are eligible for the 24 per cent EPF support under the previously announced PM Garib Kalyan Package (PMGKP). The Centre has , however, extended the PMGKP package by another three months till August 2020.