2 July 2025: PIB Summary For UPSC

1. Cabinet Approves Employment Linked Incentive (ELI) Scheme

(Source – PIB (Press Information Bureau), July, 2, 2025)

Topic: GS Paper 3 – Indian Economy: Employment schemes, labour market reforms.

Context

India’s job market has struggled with informal employment and low formal hiring, especially for first-time job seekers. The Union Budget 2024–25 announced a push to formalise the workforce and generate millions of jobs. The ELI Scheme operationalizes this vision through incentivizing both employers and newcomers in the formal job market.

Content

Overview

• Union Cabinet approves Employment Linked Incentive (ELI) Scheme to boost job creation, employability, and social security, with a focus on manufacturing.

• Launched with an outlay of ₹99,446 crore, aiming to generate over 3.5 crore jobs between 1 August 2025 and 31 July 2027.

Scheme Components

Part A – Incentives for First-Time Employees

• Eligible candidates: First-timers registered under EPFO with monthly salaries up to ₹1 lakh.

• Benefit: One-month EPF wage (up to ₹15,000) disbursed in two installments—after 6 and 12 months, with financial literacy completion.

• A portion of the amount will be locked in a savings instrument to promote financial discipline.

• Expected reach: ~1.92 crore youths.

Part B – Incentives for Employers

• Targets: Employers who create net additional formal jobs (salaries ≤ ₹1 lakh/month).

• Eligibility: Must sustain incremental hires for at least 6 months (≥2 for small, ≥5 for larger firms).

• Incentive structure (per employee):

  • Wage ≤ ₹10,000 → Employer gets ₹1,000/month

  • Wage ₹10,001–₹20,000 → ₹2,000/month

  • Wage ₹20,001–₹100,000 → ₹3,000/month

• Manufacturers get extended incentives into years 3 and 4 for sustained quarterly growth.

• Expected impact: ~2.60 crore new jobs.

Implementation & Delivery

• Part A: Direct Benefit Transfer (DBT) via Aadhar Bridge Payment System.

• Part B: Incentives credited directly into PAN-linked employer accounts.

• Formalisation drive: By focusing on EPFO-regulated jobs, ELI accelerates formal employment and social security coverage.

• Demand-side support: Balances incentives across both supply (youth) and demand (employers), facilitating a holistic growth model.

• Manufacturing push: Extending benefits encourages long-term industrial growth, aligning with “Make in India.”

• Challenges:

  • Identifying “first-time” job seekers might be complex—requires robust EPFO data integration.

  • Monitoring sustained employment for employers demands a strong digital tracking system.

  • Possibility of manipulation or token hiring—needs strict audit mechanisms.

Way Forward

• Develop a transparent digital dashboard tracking real-time EPFO enrollments and claim disbursements.

• Strengthen grievance redressal for ineligible or delayed payments.

• Periodic third-party evaluation to ensure job creation is genuine.

• Align with skill development initiatives to boost employability.

Practice Question: “The Employment Linked Incentive (ELI) Scheme aims to formalize India’s workforce and boost job creation. Critically evaluate its design and implementation challenges. What complementary institutional measures would strengthen its impact in the manufacturing sector”

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