Context: 

The Union Cabinet has approved the Employment Linked Incentive (ELI) Scheme, signalling a significant governmental push towards employment generation and formalization of the workforce across India.

More on the News 

• The ELI Scheme was announced in the Union Budget 2024-25 as part of PM’s package of five schemes to facilitate employment, skilling and other opportunities for 4.1 Crore youth with a total budget outlay of Rs 2 Lakh Crore. 

• The benefits of the Scheme would be applicable to jobs created between 01st August 2025 and 31st July, 2027.

Key Features and Objectives

• Broad Scope: The scheme aims to support job creation, enhance employability, and provide social security across all sectors, with a notable emphasis on the manufacturing sector.

• Dual Incentive Approach:

Part A: Incentives for First-Time Employees: 

• First-time employees registered with EPFO are eligible to receive a one-month EPF wage (up to Rs 15,000) in two installments. 
• This benefit is extended to employees with salaries up to Rs 1 lakh, with payments facilitated via Direct Benefit Transfer (DBT) using the Aadhar Bridge Payment System (ABPS). 
• The 1^st instalment will be payable after 6 months of service and the 2^nd instalment will be payable after 12 months of service and completion of a financial literacy programme by the employee. 
• A portion of the incentive will be held in a savings instrument to foster financial prudence. 
• The Part A will benefit around 1.92 crore first time employees.

Part B: Incentives for Employers: 

• Employers are incentivized to create additional employment with a special focus on the manufacturing sector.
• They will receive up to Rs 3,000 per month for two years for each additional employee maintaining sustained employment for at least six months. 
• For the manufacturing sector, these incentives are extended for an additional two years (total of four years). 
• Eligibility criteria for employers include hiring a minimum number of additional employees based on the existing workforce size. 
• Payments to employers will be directly deposited into their PAN-linked accounts. 
• The part B is expected to incentivize employers for the creation of additional employment of nearly 2.60 crore persons.

• Budgetary Allocation: The scheme has an outlay of Rs 99,446 Crore, forming a crucial part of the Union Budget 2024-25's PM's package of five schemes, which has an overall budget of Rs 2 Lakh Crore.

• Projected Impact: The ELI Scheme is projected to incentivize the creation of over 3.5 Crore jobs in India within a two-year period (August 1, 2025, to July 31, 2027), with an estimated 1.92 Crore beneficiaries being first-time entrants into the workforce.

Source: PIB

https://www.pib.gov.in/PressReleasePage.aspx?PRID=2141127