Govt Approves ₹99,446 Cr ELI Scheme to Boost Jobs and Workforce Formalization

In a major boost to employment generation and workforce formalization, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the Employment Linked Incentive (ELI) Scheme. With an ambitious budget outlay of ₹99,446 crore, the scheme is poised to create over 3.5 crore new jobs across sectors, with a special emphasis on the manufacturing industry.

Announced as a part of the Union Budget 2024–25, the ELI Scheme is one of the five flagship initiatives in the ₹2 lakh crore employment and skilling package targeting 4.1 crore youth. The scheme is designed to not only incentivize first-time employment but also provide tangible benefits to employers who generate additional, sustained employment.

The benefits of the scheme will apply to jobs created between 1st August 2025 and 31st July 2027, marking a crucial period in India's roadmap toward economic recovery and employment-led growth.

Objectives of the ELI Scheme

The ELI Scheme focuses on:

• Encouraging first-time formal employment for nearly 2 crore individuals.

• Supporting employers in creating sustained, new job opportunities across sectors.

• Promoting formalization of the labor force through EPFO registration.

• Extending social security coverage via EPF contributions.

• Catalyzing job creation in the manufacturing sector, one of India's largest employment generators.

Dual-Structured Scheme: Part A and Part B

The ELI Scheme has been designed with a two-pronged approach:

Part A: Incentive to First-Time Employees

This component targets 1.92 crore first-time entrants to the formal job market.

Key Features:

• Applicable to first-time employees registered with Employees’ Provident Fund Organisation (EPFO).

• Offers a one-month EPF wage up to ₹15,000 in two installments.

  • First Installment: Paid after 6 months of continuous employment.

  • Second Installment: Paid after 12 months of employment and completion of a financial literacy program.

• Salary eligibility: Up to ₹1 lakh per month.

• A part of the incentive will be deposited into a fixed savings instrument to promote long-term saving habits.

This measure promotes income security, financial literacy, and a culture of savings among young workers entering the job market for the first time.

Part B: Incentives for Employers

This component is aimed at stimulating job creation across all sectors, with special incentives for manufacturing.

Eligibility Criteria:

• Employers must be registered with EPFO.

• Must hire a minimum of 2 additional employees (if total staff is below 50) or 5 additional employees (if total staff is 50 or more).

• These new employees must be retained for at least 6 months.

Incentive Structure (per new employee per month):

Duration of Incentives:

• General sectors: 2 years.

• Manufacturing sector: Extended to 3rd and 4th years for deeper employment impact.

This part of the scheme is projected to generate 2.6 crore additional jobs, especially in labour-intensive industries such as textiles, electronics, automobile, and consumer goods.

Disbursement and Monitoring Mechanism

To ensure efficiency and transparency in payments:

• Part A (Employees): Payments will be made directly through Direct Benefit Transfer (DBT) using the Aadhaar Bridge Payment System (ABPS).

• Part B (Employers): Funds will be transferred into PAN-linked bank accounts of eligible establishments.

The entire scheme will be digitally monitored, integrated with existing databases like EPFO, UIDAI, and PAN to ensure real-time tracking, fraud prevention, and effective targeting.

Sectoral and Societal Impact

Manufacturing Sector Boost

Given the importance of manufacturing in job creation and its role in the Make in India initiative, the ELI scheme’s extended support aims to make India globally competitive while absorbing youth into productive employment.

Social Security and Workforce Formalization

By incentivizing EPFO-linked employment, the scheme encourages businesses to bring informal workers into the formal economy, thereby ensuring:

• Provident fund benefits

• Retirement security

• Long-term employment stability

Youth Empowerment and Skill Linkages

The ELI scheme ties directly with the broader objectives of Skill India, offering an enabling environment for young people to enter the job market with formal contracts, better wages, and long-term prospects.

A Vision for Employment-Led Economic Growth

The ELI Scheme is a cornerstone policy as India aims to harness its demographic dividend. With the right push from both government and industry, the initiative is expected to revive the employment engine, particularly for the youth and first-time workers, who constitute a major share of India's future workforce.

By marrying direct financial support with structured incentives, the government is laying down a new template for employment policies—inclusive, formal, and economically productive.