7th July 2025 (11 Topics)
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Employment-Linked Incentive (ELI)
Context:
The Union Cabinet has approved the Employment-Linked Incentive (ELI) Scheme with an outlay of ?99,446 crore, aiming to create over 3.5 crore jobs over two years, especially in the manufacturing sector, and to be implemented by the Employees’ Provident Fund Organisation (EPFO).
Employment-Linked Incentive (ELI)
Objective of the Scheme:
- The ELI Scheme aims to incentivize job creation in the formal sector, particularly manufacturing.
- Part of a five-pronged strategy announced in Budget 2024–25 to improve youth employability and formal job access.
Scheme Features:
- Outlay: ?99,446 crore.
- Timeframe: From August 1, 2025 to July 31, 2027.
- Target: Creation of over 5 crore jobs; direct benefits to 1.92 crore newly employed individuals.
- EPFO as implementing agency.
Incentive Structure:
- Employee Incentives:
- Workers earning up to ?1 lakh/month will get an EPF wage equivalent up to ?15,000, paid in two installments:
- 1st after 6 months of continuous service.
- 2nd after 12 months of continuous service.
- Part of the incentive will be deposited in a locked savings instrument, withdrawable later.
- Employer Incentives:
- Employers registered with EPFO to get up to ?3,000/month per new employee for two years (sustained employment ?6 months).
- For manufacturing sector: benefits extended to 3rd and 4th years as well.
Key Concerns and Challenges:
- EPFO's Mandate: Primarily a custodian of employee savings, not designed for employment creation or subsidy disbursal.
- Transparency: Ambiguity about how funds will be allocated and monitored.
- Need for Separate Implementation Agency: Suggestions to create a dedicated body to oversee ELI.
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