The Employment Linked Incentives (ELI) Scheme is one of the most ambitious projects of the government of India to combat issues around youth unemployment, underemployment and mismatch of industry skills and workforce requirements. This government program encourages private sector job creation and retention, skill enhancement, and economic growth.
The ELI scheme consists of five new employment schemes designed to do multiple things:
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Encourage new hiring in the private sector
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Give employers financial support for the creation and sustenance of jobs
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Increase formal workforce participation
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Stimulate growth in the manufacturing sector
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Enhance youth employability by way of skill training and internships.
With the base allocation of ₹2 lakh crore for the years 2024-2025 to 2029, the scheme implementation of the ELI scheme is expected to create massive employment opportunities while maintaining stable workforce conditions in the long run.
Overview
| Feature | Details |
|---|
| Scheme Name | Employment-Linked Incentives (ELI) Scheme |
| Announced In | Union Budget 2024-25 |
| Implemented By | Government of India |
| Objective | To create employment, formalise jobs, and support skill development |
| Total Budget Allocation | ₹2 lakh crore (US$ 23.70 billion) |
| Key Focus Areas | Job creation, retention, skill training, manufacturing sector growth |
| Target Beneficiaries | First-time employees, manufacturing sector workers, employers expanding workforce |
| Scheme Duration | 2024-2029 |
| Administered By | Employees’ Provident Fund Organisation (EPFO), State Skill Missions, Private Employers |
| Mode of Implementation | Direct financial incentives to employees & employers |
Need For The Employment-Linked Incentives (ELI) Scheme
India’s struggle with youth unemployment is a big issue, especially for young and fresh graduates looking for jobs. There seems to be a problem in defining jobs, not having any formal work to perform, and even low-paying jobs. The Employment-Linked Incentives (ELI) Scheme has been formulated to bridge the gap between workers and employers.
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Unemployment among youth is remarkably high because fresh graduates and first-time job seekers face heavy competition for the limited available jobs.
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Lack of formal employment where a considerable part of the Indian workforce is engaged in informal occupational activities lacking in social security available.
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High attrition rates due to employees constantly changing jobs lead to low retention, which greatly affects the sobriety of work.
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Many grads are missing practical skills due to having no effective experience and lack of career orientation during studies.
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The shortfall of trained personnel in the manufacturing sector, which India needs to expand as a space industry and invest in, too.
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Sharp operational expense to revenue ratio creates an imbalance, especially amongst small and medium enterprises (SMEs), making employers shy away from hiring new staff.
The ELI scheme proactively addresses these issues by enabling both employees and employers to receive financial assistance, ensuring many youths can access quality jobs.
Key Employment Schemes Under The ELI Program
As part of the ELI Program, there are various schemes designed for job creation and assistance for workers. These schemes support new job seekers, encourage skilled employment, and help grow employment in the manufacturing sector. Let us examine how these schemes assist both employers and job seekers.
Scheme A: Support for First-Time Employees
Objective: Motivate companies to employ new job seekers by offering financial relief.
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Participants in this scheme receive a minimum of ₹15,000 (US$177.74) as a one-month wage subsidy, which is issued in three instalments.
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A second instalment can only be received after the employee completes an online course on financial literacy.
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Refunds are provided to the employer in cases of turnover within the first twelve months of employment.
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Target Beneficiaries: 1 crore first-time employees for 2 years.
Scheme B: Incentivising Job Creation in Manufacturing
Objective: Stimulate new job opportunities in the manufacturing sector via direct incentives to employers.
Employer Benefits:
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Minimum additional hires required: 2 new hires for small companies and five new hires for large firms.
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For four years, incentives are provided for salaries up to ₹1 lakh (US$ 1,184).
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Employers must have a minimum of three years of EPFO contribution history.
Scheme C: Employer Support for EPFO Contributions
Objective: Lessen the financial strain on employers looking to recruit new personnel.
Employer Benefits:
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For 24 months, employers are reimbursed monthly for each new hire.
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Eligibility is limited to newcomers not enrolled in Scheme B.
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Employers who create more than 1,000 new posts are also included.
Scheme D: Skilling Program with State & Industry Collaboration
Objective: Improve the employability of 20 lakh youth through training and skill development.
Key Features:
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Funds: ₹60,000 crore (US$ 7.11 billion).
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Upgrade 1,000 Industrial Training Institutes (ITIs) under a hub-and-spoke approach.
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Industry-specific short-term programs with a partner company.
Scheme E: Internship Program with Top Companies
Objective: To connect one crore unemployed young adults with internship opportunities at top companies.
Internship Benefits:
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Internships lasting 12 months come with a stipend of ₹5,000 per month.
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A lump sum one-time payment of ₹6,000 will also be provided.
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Youth aged 21 to 24 with lesser chances of employment have an added advantage.
Financial Allocation And Coverage
The ELI program aims to enhance both job creation and worker support, and it readily has the funds to do so. Spending is done with precision so that all programs ELI has implemented can yield maximum results. This is how the money is split across the major initiatives.
| Scheme Name | Target Beneficiaries | Total Budget Allocation |
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| First-Time Employment Scheme | 2.1 crore beneficiaries | ₹23,000 crore (US$ 2.73 billion) |
| Job Creation in Manufacturing Scheme | 30 lakh beneficiaries | ₹52,000 crore (US$ 6.16 billion) |
| Support to Employers Scheme | 50 lakh beneficiaries | ₹32,000 crore (US$ 3.79 billion) |
| Total | 2.9 crore beneficiaries | ₹1,07,000 crore (US$ 12.68 billion) |
Expected Impact of the ELI Scheme
The Employment-Linked Incentives or ELI Scheme’s primary objective is to create new job openings and put a student on economic growth. It aims to target the remaining gaps in unemployment, skill improvement, and industrial development. Following is the expected impact of the scheme.
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Introduce 2.9 million new jobs in the informal sector.
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Support youth unemployment by subsidising new entrants into the labour market.
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Increase skill development through collaboration between government and businesses.
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Promote the growth of manufacturing industries through the provision of financial benefits to employers.
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Improve retention rates of employees by lowering recruitment and selection costs.
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Increase social mobility for those young people from disadvantaged backgrounds.
Conclusion
The ELI Program is incredibly important for the creation of jobs, nurturing skills, and formalising the workforce structure in India. With the program’s aim designed to stimulate economic growth in the long run, both employees and employers will be rewarded with monetary perks which help in getting the skilled populace ready for work. The vast sum of ₹2 lakh crore should immensely change the job scene in India over five years. This will aid in guaranteed improvement in job opportunities, industry development, and economic security for countless workers.
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