Government Approves Employment Linked Incentive Scheme

In a major step towards accelerating employment generation and enhancing workforce participation, the Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the Employment Linked Incentive (ELI) Scheme. Furthermore, with a strong emphasis on job creation, particularly in the manufacturing sector, the scheme aims to generate over 3.5 crore jobs in the next two years. This effort is backed by a substantial outlay of Rs 99,446 crore.

The ELI Scheme is a key component of the Union Budget 2024–25 and part of the government’s broader package of five initiatives designed to provide employment, skilling, and livelihood opportunities for over 4.1 crore youth, with a total allocation of Rs 2 lakh crore.

Key highlights of the ELI scheme:

Two-part structure to benefit both employees and employers

The ELI Scheme includes two main components.

Part A: Incentives for first-time employees

Target group: First-time job seekers registered with EPFO.
Financial benefit: Eligible employees will receive a one-month EPF wage up to Rs 15,000, disbursed in two installments:
1. First installment after 6 months of continuous service.
2. Second installment after 12 months of service and completion of a financial literacy programme.
Savings focus: The scheme places a part of the incentive in a savings instrument to encourage long-term financial discipline.
Eligibility: Employees earning up to Rs 1 lakh/month.
Impact: Expected to benefit around 1.92 crore youth entering the workforce for the first time.

Part B: Support for employers to generate jobs

Objective: Encourage employers to create additional jobs across all sectors, with extended benefits for the manufacturing sector
Incentives: Employers will receive financial support for each new employee earning up to Rs 1 lakh/month, based on EPF wage slabs:
1. Up to Rs 10,000 – Incentive up to Rs 1,000/month
2. Rs 10,001 to Rs 20,000 – Incentive of Rs 2,000/month
3. Above Rs 20,000 up to Rs 1 lakh – Incentive of Rs 3,000/month
Duration: Incentives will be provided for two years, with an additional two-year extension for jobs created in the manufacturing sector.
Eligibility criteria:
1. Employers must be EPFO-registered.
2. Must hire a minimum of two new employees (if the establishment has fewer than 50 employees) or five new employees (if 50 or more employees).
3. Employment must be sustained for at least six months.
Impact: Aims to support the creation of nearly 2.60 crore new jobs through employer incentives.

Direct Benefit Transfer for seamless disbursal

Employees (Part A): The government will transfer payments to employees via Direct Benefit Transfer (DBT) using the Aadhaar-Based Payment System (ABPS).
Employers (Part B): The government will credit incentives directly to employers’ PAN-linked accounts.

Also read: Empowering Girls through Vocational Training: NAVYA Initiative launched in Sonbhadra

Driving Formalization and Social Security

By incentivizing both employers and employees, the ELI Scheme aims to boost job creation and increase formal employment. It also helps extend social security coverage to a large section of India’s youth. The scheme places a strong policy focus on manufacturing. As a result, it supports the government’s vision of building a resilient, inclusive, and future-ready workforce.

The benefits of the ELI Scheme will apply to jobs created between August 1, 2025, and July 31, 2027. This marks a crucial step toward strengthening India’s labour market and making it more inclusive.