The Union Cabinet approved the Employment-Linked Incentive (ELI) Scheme with a financial outlay of Rs. 99,446 crore  to support employment generation, enhance employability and social security across all sectors, primarily focused on the manufacturing sector. It was part of the Rs. 2 lakh crore package for employment and skilling announced in the Union Budget 2024–25.

• Aimed at generating 3.5 crore jobs in two years and supporting 4.1 crore youth across India.
• The Manufacturing sector contributes  17% to India’s GDP. 

About Employment Linked Incentive (ELI) Scheme

• The ELI Scheme seeks to address persistent challenges in the Indian labour market, such as:
  • Limited formal workforce inclusion
  • Sluggish job growth in the manufacturing sector
  • Inadequate incentives for young job seekers entering the workforce
• The scheme has a dual focus:
  • Providing support to first-time employees
  • Encouraging employers to create and sustain additional employment
• The scheme consists of two main components: Incentives for First-Time Employees and Employer Incentives for Job Creation

Part A: Incentives for First-Time Employees

• Designed for individuals registering with the Employees’ Provident Fund Organisation (EPFO) for the first time.
• Eligibility for employees earning up to ₹1 lakh/month
• A one-time benefit of one month’s EPF wage (up to ₹15,000), paid in two instalments:
• First instalment after six months of continuous employment
• Second instalment after twelve months, upon completion of a financial literacy programme
• A portion of the benefit will be deposited in a long-term savings account to promote financial discipline

Part B: Employer Incentives for Job Creation

• This component encourages employers across sectors—especially manufacturing—to hire and retain new employees.
• Key Features include Monthly incentives for each new employee retained for at least six months
• Eligibility thresholds: 
  • Employers with <50 workers must hire at least 2 new employees
  • Employers with 50 or more workers must hire at least 5 new employees
• Incentive to Employers: Up to 3,000/month for 2 years; extended to 4 years for manufacturing sector.

Implementation

• All disbursements will be made through the Direct Benefit Transfer (DBT) system for accountability and efficiency:
  • Employee incentives (Part A) will be processed via the Aadhaar Bridge Payment System (ABPS)
  • Employer payments (Part B) will be credited directly to PAN-linked bank accounts
• By tying incentives to job continuity and EPFO registration, the scheme promotes long-term employment and reduces misuse.

Impacts of ELI scheme on Labour and Industry

• Formalising the workforce
• Encouraging financial literacy
• Expanding social security access
• Supporting a resilient post-pandemic labour ecosystem

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