Employment Linked Incentive (ELI) Scheme.
- The ELI Scheme is a flagship initiative approved by the Union Cabinet under the chairmanship of Prime Minister Narendra Modi. It aims to:
- Generate over 3.5 crore jobs across sectors, with special emphasis on the manufacturing sector
- Incentivize employers to create sustained employment
- Support first-time workers joining the formal workforce
- Promote financial discipline and social security
- Announced in Budget 2024–25, it forms part of the ₹2 lakh crore package to benefit 4.1 crore youth through employment, skilling, and other opportunities.
Key Components:
Part A – Support for First-Time Employees:
- Target Group: Youth entering the workforce for the first time, registered with EPFO
- Eligibility: Monthly salary up to ₹1 lakh
- Incentive: One-month EPF wage (up to ₹15,000), paid in two instalments:
- 1st instalment: After 6 months of continuous employment
- 2nd instalment: After 12 months and completion of a financial literacy program
- Savings Feature: A portion of the incentive is locked in a savings instrument or deposit account for a fixed term to promote saving habits
- Disbursal Mode: Direct Benefit Transfer (DBT) using Aadhaar Bridge Payment System (ABPS)
- Expected Impact: Direct benefit to 1.92 crore first-time employees
Part B – Incentive for Employers Creating Sustained Jobs:
Target: All EPFO-registered establishments across sectors, with a focus on manufacturing
Eligibility:
o Employers with <50 employees must hire at least 2 new workers
o Employers with ≥50 employees must hire at least 5 new workers
o new hires must be retained for a minimum of 6 months
Incentive:
o ₹1,000/month for salary ≤ ₹10,000
o ₹2,000/month for salary between ₹10,001–₹20,000
o ₹3,000/month for salary between ₹20,001–₹1,00,000
o Duration: 2 years for all sectors; extended to 3rd and 4th year for manufacturing sector
Disbursal Mode: Direct payment into PAN-linked bank accounts of employers
Why It Matters
- Formalisation of Workforce: Extends PF and social security to fresh entrants, promoting formal employment.
- Boosting Manufacturing: Offers extended benefits in manufacturing, aligning with India’s industrial growth objectives.
- Youth Employment: Aims to absorb high unemployment among urban (17.9%) and rural youth (13.7%) aged 15–29.
- Public–Private Synergy: Encourages employer participation and first-time hiring, bridging the gap between skill and employment demand.
- Macro Goals: Supports job creation targets (~7.85 million/year till 2030) and complements skill initiatives like Skill India and PMKVY.