The Union Cabinet on Tuesday gave its nod to the Employment Linked Incentive (ELI) Scheme aimed at encouraging large-scale job creation and strengthening social security for the country’s workforce.
The ELI Scheme, which was announced in the Union Budget 2024–25 as part of the Prime Minister’s package of five schemes for youth employment and skilling, has a total budget outlay of Rs 99,446 crore. It targets the creation of over 3.5 crore jobs within two years, with benefits applicable for employment generated between August 1, 2025, and July 31, 2027. Of the total employment target, 1.92 crore beneficiaries are expected to be first-time entrants into the workforce.
The scheme comprises two key components. Under the first component, first-time employees registered with the Employees’ Provident Fund Organisation (EPFO) will receive a direct incentive equivalent to one month’s wage, capped at Rs 15,000, paid in two instalments. Eligible employees with monthly salaries up to Rs 1 lakh will receive the first instalment after six months of continuous service and the second instalment after twelve months, subject to completion of a financial literacy programme. To encourage saving habits, a part of the incentive will be held in a fixed deposit or savings instrument, which can be accessed by the employee at a later stage.
The second component focuses on incentivising employers to create additional jobs across sectors, with added benefits for the manufacturing industry. Employers registered with the EPFO will receive up to Rs 3,000 per month for each new employee retained for at least six months. The incentive varies according to the wage slab, with employers receiving Rs 1,000 per month for employees earning up to Rs 10,000, Rs 2,000 for those earning between Rs 10,000 and Rs 20,000, and Rs 3,000 for those with wages above Rs 20,000 but within the Rs 1 lakh limit. For establishments with fewer than 50 employees, at least two new hires must be made to qualify for the incentive, while larger establishments must hire at least five. In the case of the manufacturing sector, the benefits for employers will extend up to four years.
Payments to first-time employees will be made through Direct Benefit Transfer using the Aadhaar Bridge Payment System, while payments to employers will be credited directly to their PAN-linked bank accounts.
The ELI Scheme is part of the government’s broader push to facilitate employment and skill development for 4.1 crore young people under the budgeted allocation of Rs 2 lakh crore. Apart from boosting job opportunities, the scheme is expected to advance the formalisation of the workforce by extending social security cover to millions of youth entering the organised sector for the first time.
