(GIST OF KURUKSHETRA) Fostering Jobs, Building Bharat: ELI Scheme as a Gamechanger



(GIST OF KURUKSHETRA) Fostering Jobs, Building Bharat: ELI Scheme as a Gamechanger

(SEPTEMBER-2025)

Fostering Jobs, Building Bharat: ELI Scheme as a Gamechanger



Context:

Prime Minister’s package of five schemes in the Union Budget 2024- 25, the Employment Linked Incentive Scheme (ELI) came into force with effect from 1st August 2025. With a projected outlay of Rs. 99,446 cr., this scheme aims at refurbishing the employment sphere of the country by facilitating employment, skilling, reskilling and upskilling and other opportunities for India’s youth. The ELI scheme in India has been launched with a distinct strategic rationale which differentiates it from various traditional skill-development schemes/programmes focused on training, skilling and upskilling.

Distinctive Approach:

  • Unlike earlier training-based schemes, ELI is designed with a strategic rationale:

  • Linking skills directly with jobs.

  • Creating joint responsibility between employers, industries, and government.

  • Moving towards demand-driven skilling aligned with industry needs.

  • Boosting formal job registration and strengthening formal employment.

Existing Employment and Skill Development Scenario

  • Evolution of Government Programmes

  • Past employment programmes moved from broad-based welfare approaches to targeted skill-based interventions.

Key objectives:

  • Equitable access to jobs.

  • Reducing unemployment.

  • Promoting self-reliance.

  • Strengthening the industry workforce.

  • Driving inclusive and sustainable growth.

Skill India Mission (SIM)

  • Implemented by the Ministry of Skill Development and Entrepreneurship (MSDE).

  • Focuses on preparing youth with industryrelevant skills through:

  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY).

  • Jan Shikshan Sansthan.

  • National Apprenticeship Promotion Scheme (NAPS).

  • Craftsman Training Scheme via ITIs.

  • Sector Skill Councils (SSCs)

  • 36 SSCs, led by industry leaders.

  • Define skill needs and competency standards for different sectors.

Digital Integration:

  • Skill India Digital Hub – integrates skilling, education, employment, and entrepreneurship under one umbrella.

Rural-Focused Schemes:

  • Deen Dayal Upadhyaya – Grameen Kaushal Yojana.

  • Rural Self-Employment Training Institutes (RSETIs).

  • Cater to rural youth, focusing on agriculture, handloom, tourism, etc.

Past Incentive-Based Job Scheme:

  • Aatmanirbhar Bharat Rojgar Yojana (ABRY) launched in October 2020 to incentivize employment post-COVID.

  • Valid till March 2022, it benefitted 60.49 lakh workers through 1.52 lakh establishments.

  • However, ABRY was short-term and crisis-driven, while ELI was long-term and systemic.

Why the ELI Scheme?

  • Need for a New Model.

  • Existing programmes focused on skilling but often failed to guarantee actual jobs.

  • India’s demographic dividend requires employment-driven growth rather than just skill creation.

  • Strategic Interventions:

  • Direct linkage between skills and employment.

  • Employer accountability through incentivisation.

  • Demand-driven training tailored to industry needs.

  • Boost to formal employment via EPFO linked registrations.

ELI Scheme: A Brief Overview

Objectives:

  • Focus on the manufacturing sector.

  • Support employment generation.

  • Enhance employability.

  • Extend social security coverage across sectors.

  • Budget – ₹99,446 crore.

  • Scope & Scale – Pan-India, targeting 3.5 crore jobs in 2 years.

  • Timeframe – Applicable for jobs created between 1 Aug 2025 – 31 Jul 2027.

  • Major Outcome – Job creation, formalisation of the workforce, and wider social security coverage.

Structural Framework of the Scheme

  • Incentives for First-Time Employees 

  • Target Group: 1.92 crore first-time workers registered with EPFO.

  • Eligibility: Employees earning up to ₹1 lakh/month.

Incentives:

  • One month’s EPF wage (up to ₹1 lakh).

  • Paid in 2 instalments: after 6 months and after 12 months (with completion of financial literacy programme).

  • Portion locked in a savings instrument for future access.

  • Payment: Through DBT via Aadhaar enabled systems.

  • Incentives for Employers 

  • Target: Creation of 2.6 crore additional jobs, with emphasis on manufacturing.

Eligibility:

  • Must sustain employment for at least 6 months.

  • Must be EPFO-registered.

  • Minimum additional hiring: 2–5 workers depending on establishment size.

Incentives:

  • Up to ₹3000 per month per employee for 2 years.

  • For the manufacturing sector: extended to 3rd and 4th years.

  • Slab Structure:

  • ₹1000 (wages ≤ ₹10,000).

  • ₹2000 (₹10,001–20,000).

  • ₹3000 (₹20,001–1,00,000).

  • Payment: Through DBT to PAN-linked employer accounts.

Multi-Stakeholder Execution Framework

Key Agencies:

  • Government ministries: Labour, Skill Development, Economic Affairs, Finance.

  • Institutions: EPFO, UIDAI, NIC, NPCI, CAG.

  • Industry: Employers, industry associations.

  • Technology partners: For Aadhaar, GST, IT integration.

  • Execution Tools: Employer/employee onboarding platforms.

  • Monthly ECR filing with wage details.

  • Aadhaar-linked identity checks.

  • Cross-verification with GST and IT filings.

  • Real-time dashboards for monitoring job creation.

  • Random audits and fraud detection mechanisms.

Challenges and Solutions

Potential Leakages:

  • Ghost employees to claim benefits- Solution: Cross-verification using Aadhaar, PAN, GST, IT filings, biometric checks.

  • Salary under-reporting by employers - Solution: Compare ECR with payslips, bank transfers, IT filings; impose penalties.

  • Employee attrition - Solution: Encourage employer-led retention programmes.

  • DBT failures - Solution: Strong Aadhaar NPCI-bank integration.

  • Low awareness- Solution: Outreach via labour offices, MSME networks, social media.

  • Weak training delivery- Solution: Partner with MSDE, CSCs, NGOs for financial literacy and skilling.

  • Monitoring risks with a large budget - Solution: AI/ML-driven fraud detection, third-party audits.

Expected Outcomes

  • Creation of 3.5 crore jobs in 2 years.

  • Formalisation of workforce through EPFO-linked jobs.

  • Social security expansion across sectors.

  • Special boost to manufacturing sector employment.

  • Enhanced financial literacy and retention among first-time employees.

  • Strengthened industry–government partnership in employment generation.

Conclusion:

The Union Government has launched ELI scheme interventions are achievable. Unified efforts of stakeholders will ensure strong data integration, active monitoring and concurrent evaluation, clarify employer accountability, set up citizen-responsive grievance system and expand outreach through grassroots awareness campaigns on the benefits of this novel forward-looking and revolutionary employment linked incentive scheme.

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Courtesy: Kurukshetra