Employment Linked Incentive (ELI) Scheme: A Giant Leap for Job Creation and Workforce Formalization in India

In a landmark move aimed at boosting employment, enhancing employability, and expanding social security, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Employment Linked Incentive (ELI) Scheme. With a staggering outlay of ₹99,446 Crore, this ambitious scheme is set to create over 3.5 crore jobs over the next two years, with a strong push toward formalizing the workforce and revitalizing the manufacturing sector.

What is the ELI Scheme?

The Employment Linked Incentive (ELI) Scheme is a central government initiative launched to:

• Catalyze job creation across all sectors, especially manufacturing
• Support first-time job seekers with direct incentives
• Provide employers with financial benefits for hiring and retaining staff
• Extend social security through EPFO coverage

The scheme was first announced in the Union Budget 2024–25 as part of a larger ₹2 Lakh Crore package focused on employment and skilling opportunities for over 4.1 crore youth.

Key Features

Part A – Incentives for First-Time Employees

• Who’s eligible?
  First-time employees registered with EPFO earning up to ₹1 lakh/month.
• What’s the benefit?
  One-month EPF wage (up to ₹15,000), paid in two installments:
  • 1st Installment: After 6 months of continuous employment
  • 2nd Installment: After 12 months, along with completion of a financial literacy program
• Savings feature:
  A part of the benefit will be placed in a savings/deposit instrument to encourage financial prudence.
• Impact:
  Expected to benefit 1.92 crore first-time employees.

Part B – Incentives for Employers

• Who’s eligible?
  Employers registered with EPFO who hire:
  • At least 2 new employees (if current staff is <50)
  • At least 5 new employees (if current staff is ≥50)
    for at least 6 months continuously.
• What’s the benefit?
  Government incentives per new employee (monthly):

• Incentive duration:
  • 2 years for all sectors
  • Extended to 4 years for manufacturing sector
• Impact:
  Expected to generate 2.6 crore additional jobs.

How Will It Work?

• First-time employees will receive incentives via Direct Benefit Transfer (DBT) using the Aadhar Bridge Payment System (ABPS).
• Employers will receive payments directly into PAN-linked bank accounts.

Why This Matters: The Bigger Picture

The ELI Scheme is more than just a financial incentive. It’s a visionary policy step towards:

Formalizing informal labor by bringing more workers under EPFO
Encouraging youth participation in the workforce
Skilling and financial awareness, especially for first-time earners
Reviving manufacturing, a critical sector for India’s economic growth
Addressing unemployment and underemployment at scale

Final Thoughts

In a time where automation, AI, and global market shifts are changing job landscapes, India’s ELI Scheme stands out as a proactive and people-centric move. With a well-structured incentive system for both employees and employers, this scheme aims to bridge the gap between policy and people.

Whether you’re a job-seeker, a business owner, or a policy enthusiast, the Employment Linked Incentive Scheme is a development worth watching—and participating in.