Cabinet Approves Rs 1.07 Lakh Crore Employment Linked Incentive Scheme to Enhance Job Creation

The Union Cabinet, chaired by PM Narendra Modi, has approved an Employment Linked Incentive (ELI) scheme with a budget of ₹1.07 lakh crore.

The scheme aims to generate over 3.5 crore new jobs in two years, with a strong focus on enhancing employability, job creation, and social security, especially in the manufacturing sector.

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Key highlights:

• Employers will receive up to ₹3,000/month per first-time employee for two years.
• Incentives apply to employees earning up to ₹1 lakh/month.
• For manufacturing, incentives will extend to the third and fourth years as well.

The move is expected to boost job opportunities and formal employment across sectors.

As part of the Union Budget 2024–25, the government has approved the Employment Linked Incentive (ELI) scheme with a ₹1.07 lakh crore outlay. It is one of five major schemes aimed at supporting employment, skilling, and livelihood for 4.1 crore youth, under a combined ₹2 lakh crore package.

Key Highlights of the ELI Scheme:

1. Goal: Create over 3.5 crore jobs in two years (Aug 1, 2025 – July 31, 2027).
2. First-time entrants: 1.92 crore first-time employees will benefit.
3. Eligibility: Employees earning up to ₹1 lakh/month.

Scheme Structure:

Part A – For Employees:

• Targets first-time EPFO-registered workers.
• Offers one month’s wage (up to ₹15,000) in two instalments.
• 1st instalment after 6 months of service.
• 2nd instalment after 12 months + financial literacy program completion.

Part B – For Employers:

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• Incentive of up to ₹3,000/month per additional employee for 2 years.
• Manufacturing sector gets extended benefits for 3rd and 4th years as well.
• The scheme is designed to formalize employment and promote long-term job retention, especially in the manufacturing sector.

"To encourage the habit of saving, a portion of the incentive will be kept in a savings instrument or deposit account for a fixed period and can be withdrawn by the employee at a later date. Part A will benefit around 1.92 crore first-time employees," the statement said.

Under Part B of the ₹1.07 lakh crore Employment Linked Incentive (ELI) Scheme, the government will support employers across all sectors—with a special focus on manufacturing—to generate 2.6 crore additional jobs over two years.

Key Features of Part B:

Who qualifies: EPFO-registered establishments.

Minimum hiring requirement:

• Hire at least 2 additional employees (for firms with <50 employees).
• Hire at least 5 additional employees (for firms with ≥50 employees).
• Employment must be sustained for at least 6 months.

Monthly Incentives for Employers (per new employee):

• ₹1,000 for salaries up to ₹10,000.
• ₹2,000 for salaries above ₹10,000 and up to ₹20,000.
• ₹3,000 for salaries above ₹20,000 and up to ₹1 lakh.
• Proportional incentive for those earning below ₹10,000.

Incentive duration:

• 2 years for all sectors.
• Extended to 3rd and 4th years for the manufacturing sector.

Payment Mode:

• Employer incentives will be paid via PAN-linked accounts.
• Employee benefits under Part A will be credited through Aadhaar-based DBT using ABPS.
• This initiative aims to formalize employment, increase hiring, and strengthen job creation across India, especially in the manufacturing space.