Employment Linked Incentive (ELI) Scheme
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Employment Linked Incentive (ELI) Scheme

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 1st instalment will be payable after 6 months of service and the 2nd 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.
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