Cabinet Approves ₹99,446 Crore Employment-Linked Incentive Scheme

A total outlay of 99,446 crore ₹ are under the Union Cabinet approval to provide more than 3.5 crore employment in the next two years through an Employment-Linked Incentive (ELI) Scheme. The program has direct financial incentives to the employers and new employees with the scheme being concentrated on the manufacturing industry. It contains the weighted incentives that are based on salary, as well as the minimum requirements on the amount hired. The payments will be done through DBT through Aadhaar-enabled systems. The program can also help official growth in the workforce and help the objectives of Aatmanirbhar Bharat.

Context

• In an attempt to solve the problems of increased unemployment and enhanced employment creation particularly among the young people, the Government of India has introduced the ELI scheme. 
• It belongs to the comprehensive policy of employment within the framework of the 2024-25 Union Budget.

Key Highlights

Objectives

• Create 3.5 crore employment in two years.
• Promote new hire employment.
• Enhance the manufacturing industry.
• Encourage legalization of labor.

Scheme Segments

Part A- Bonus to the First-time Employees

• 25 percent of one month salary (up to 15,000) in two annuities after 6 and 12 months.
• This will apply to employees with a 1 lakh/month or less pay scale.
• First deposit entails the training of financial literacy.

Part B- Employer Incentive

• Incentives of between 1,000 (Rupees) and 3,000 (Rupees) a month depending on payroll.
• The production industry was given incentives on a two-year basis.

Incentive Structure Based on EPF Salary

Hiring Mandate:

• Companies having less than 50 employees: employ 2 or more workers.
• Companies employing 50 or more people: employ 5 or more workers.

Payment Mechanism

• Employees: Direct Benefit Transfer on Aadhaar-based payment system (ABPS).
• Employers: Transfer associated with PAN-verified bank account.

Eligibility

• Up to 1lakh salaries per month.
• The jobs generated during August 1, 2025 to July 31, 2027.

Allocation and Budget

• Gross expenditure: Rs.99,446 crores.
• A component of the 2 lakh crore employment scheme in the union budget 2024 25.

Impact of Employment-Linked Incentive Scheme:

• Employment: It is projected to generate over 3.5 crore jobs of which major considerations will be in the manufacturing sector.
• Youth Empowerment: The first-time job seekers will be targeted to venture into the job world and acquire experience.
• Employer Incentives: Offers incentives in the form of finance to the employer which motivates him to layoff more people and increase labor force.
• Social security: Expands social security concession to larger group of labor market, legalises employment.
• Economic Growth: Improves economic growth through unemployment reduction, and by enhancing the employability of people, which empowers and builds up an economy.
• Skills Development: Enhances the skills development in terms of financial literacy programs to help the first-time employees develop necessary financial knowledge.
• Dwelling on Manufacturing: Concentrate on creating employment opportunities in the manufacturing industry which will help in industrial development and building its manufacturing capabilities.

Need  of Employment-Linked Incentive Scheme:

• High Unemployment: Deals with the unending employment crisis.
• Atma Nirbhar Bharat: Creating self reliance by creating jobs.
• Industrial Focus: Rewards sector job-intensive industries such as manufacturing.
• Formalization: Broadens EPF as well as social security.

Conclusion

The Employment-Linked Incentive scheme is a revolutionary scheme to address the menace of unemployment and to enhance industrial employment. Only focusing on young employees and employers, it consequently can be linked to such national agendas as Make in India and Aatmanirbhar Bharat. Strong implementation and open tracking will be the core elements to guaranteeing long-term effects and sustainability.