Cabinet Approves Rs 1 Lakh Crore ELI Scheme to Create 3.5 Crore Jobs

In a landmark decision aimed at boosting employment and strengthening the formal workforce, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the Employment Linked Incentive (ELI) Scheme with a financial outlay of Rs 1 lakh crore. The scheme is expected to create 3.5 crore additional jobs over the next two years, focusing on enhancing employability, social security, and promoting job creation, especially in the manufacturing sector.

The ELI Scheme, announced in the Union Budget 2024-25, is part of the Prime Minister’s broader five-scheme package aimed at benefiting 4.1 crore youth through employment and skilling initiatives. With an allocation of Rs 99,446 crore, the scheme aims to boost employment opportunities and ensure wider participation in the organised workforce. Out of the projected 3.5 crore new jobs, around 1.92 crore beneficiaries will be first-time employees.

The scheme has two key components. Part A targets first-time employees registered with the Employees’ Provident Fund Organisation (EPFO). Eligible individuals will receive an incentive equal to one month’s EPF wage, up to Rs 15,000, in two instalments. The first instalment will be paid after six months of continuous service, and the second will be given after 12 months, along with the completion of a financial literacy programme. To promote financial discipline, a portion of the incentive will be deposited into a fixed deposit or savings account, accessible to the employee at a later stage.

Part B of the scheme offers incentives to employers who generate new jobs across sectors, with a special thrust on the manufacturing sector. Employers will be eligible for monthly incentives of Rs 1,000 to Rs 3,000 per employee, depending on the salary bracket. Those employing workers with monthly wages up to Rs 10,000 will receive Rs 1,000 per employee; Rs 2,000 for wages between Rs 10,000 and Rs 20,000; and Rs 3,000 for wages above Rs 20,000 and up to Rs 1 lakh. The incentives will be provided for two years, with additional support extended for the third and fourth years for manufacturing units.

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To qualify, establishments registered with EPFO must hire at least two additional employees (for units with fewer than 50 workers) or five additional employees (for units with 50 or more workers), with a minimum retention period of six months.

All payments under Part A will be routed through the Direct Benefit Transfer (DBT) system using the Aadhaar Bridge Payment System. For Part B, employer incentives will be transferred directly to their PAN-linked bank accounts, ensuring seamless and transparent transactions.

The scheme will apply to jobs created between August 1, 2025, and July 31, 2027, and is expected to incentivise employers to create nearly 2.6 crore new jobs. With its dual benefit approach supporting both workers and businesses the ELI Scheme is poised to be a game-changer in addressing youth unemployment, reskilling the workforce, and catalysing India’s growth as a global economic powerhouse.