CURRENT AFFAIRS
CURRENT AFFAIRS
Description
In a landmark move aimed at accelerating employment generation and strengthening India’s labour ecosystem, the Union Cabinet chaired by Prime Minister Narendra Modi has given its nod to the Employment Linked Incentive (ELI) Scheme. This initiative is designed to support large-scale job creation, enhance the employability of new entrants into the workforce, and improve access to social security, particularly in the manufacturing sector.
About Employment Linked Incentive (ELI) Scheme
The ELI Scheme is a newly introduced program that seeks to bridge gaps in employment by incentivizing both employees and employers. The scheme was first announced in the Union Budget 2024–25 as part of a broader package of five employment-focused schemes, all aimed at empowering over 4.1 crore youth. The total financial outlay for this employment package stands at Rupees 2 lakh crore, making it one of the most ambitious government initiatives for youth and job growth in recent years.
Key Objectives Of ELI Scheme
Promote employment generation across all sectors, with special emphasis on manufacturing.
Facilitate entry-level employment for first-time workers, providing financial assistance to ease workforce integration.
Encourage employers to expand their workforce by offering direct monetary incentives for sustained employment.
Enhance social security coverage through increased registrations under the Employees' Provident Fund Organisation (EPFO).
Improve labour participation rates by targeting individuals from economically weaker and underrepresented segments.
Structural Design Of ELI Scheme
The ELI Scheme is divided into two components:
Part A: Incentives for First-Time Employees
This component specifically targets individuals joining the workforce for the first time. Key features include:
Eligible individuals registered with EPFO and earning a monthly wage of up to Rupees 1 lakh will receive one month’s EPF wage, capped at Rupees 15,000, disbursed in two installments.
Payments will be processed through Direct Benefit Transfer (DBT) using the Aadhaar-Based Payment System (ABPS), ensuring transparency and timely disbursal.
Part B: Incentives for Employers
This part encourages companies to generate additional employment. Highlights include:
Applicable across all sectors, with special incentives for the manufacturing sector.
Employers will receive up to Rupees 3,000 per month for each new employee added to their workforce, provided the job is retained for at least six months.
The incentive period will last for two years across all sectors and will be extended to four years for jobs created in the manufacturing sector.
Payments to employers will be made directly to their PAN-linked bank accounts.
Implementation Timeline
The scheme applies to jobs created between August 1, 2025, and July 31, 2027.
Over this two-year window, the government aims to create more than 3.5 crore jobs.
Of these, an estimated 1.92 crore are expected to be first-time workers entering formal employment.
Economic And Social Significance
The ELI Scheme has the potential to redefine India’s approach to job creation by:
Supporting inclusive economic growth, especially for first-generation workers and economically marginalized groups.
Reinforcing formal employment structures and extending social security benefits to more workers.
Contributing to the vision of Atmanirbhar Bharat by supporting domestic manufacturing, which remains a priority sector.
Strengthening the digital economy through efficient, paperless, and DBT-based administration.
Future Outlook
With the ELI Scheme, the government expects not only to generate immediate employment opportunities but also to create a sustainable ecosystem for workforce development. If implemented effectively, it could serve as a model framework for future labour market interventions aimed at making India’s youth more employable and industries more competitive.
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