The Indian government is testing a programme to subsidise maternity leave at companies

• The Ministry of Labour is testing a programme to bear the costs of half of the 14 additional weeks for maternity leave granted under the Maternity Benefit bill passed last year.
  
• The Maternity Benefit bill, which raised the paid maternity leave period from 12 weeks to 26 weeks, is believed to have disincentivised Indian companies from hiring women.
  
• As a result, the Indian government will pilot a programme in Delhi and the state of Maharashtra wherein it will bear the cost of seven weeks of maternity leave for female employees.

After passing the Maternity Benefit Amendment Bill in March last year, the Indian government is now planning to incentivise companies to hire and retain female employees by subsidising the cost of maternity leave. The Ministry of Labour is testing a programme to bear the costs of half of the 14 additional weeks for maternity leave granted under the bill, a government official told the Economic Times.


The Maternity Benefit bill, which was made effective starting April 2017, raised the paid maternity leave period at companies with 10 or more employees from a mere 12 weeks to 26 weeks. However, the law is believed to have disincentivised Indian companies from hiring women, owing to the increased costs of maternity leave.

In fact, the labour ministry has been made aware of a trend of female employees being asked to quit prior to taking maternity leave. There have also been instances of female employees availing of maternity benefits and failing to return to work, which has made companies more wary. While these issues could be corrected by making the bill gender neutral, the mainstreaming of paid paternal leave in India seems a long way off.

As a result, the ministry has been working on a plan to bear part of the extra costs of granting maternity leave to female employees. It will pilot a programme in Delhi and the state of Maharashtra wherein it will bear the cost of seven weeks of maternity leave for a female employees.

However, there’s a slight catch. The programme will only apply to a specific subset of female employees for the time being. In addition to being EPFO subscribers for a whole year, they have to be in the ₹15,000 a month salary bracket.

The overall outlay for the government on the programme is expected to be ₹4 billion on an annual basis. If the pilot proves successful, the programme will likely be scaled up to the rest of India.

If this happens, it could go a long way towards preventing the discrimination of women of childbearing age when it comes to hiring practices in the private sector. As has been discussed before, it is in India’s economic interest to increase the share of women it’s in workforce.


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