The ELI scheme will benefit both the employee and the employer
The Union Cabinet’s approval for a new initiative — the Employment Linked Incentive (ELI) Scheme — to boost employment generation in the manufacturing sector through the transfer of direct benefit (DBT) signals the seriousness that the Narendra Modi government accords to the job creation in the country.
The ELI scheme will benefit both the employee and the employer. Under this scheme, the first-time employees will get one month’s wage (up to Rs 15,000) in two instalments. While one instalment — Rs 7,500 — will be paid after six months of service, the second instalment will be paid after 12 months of service and completion of a financial literacy programme through a deferred payment in the form of a fixed deposit.
The employer will get monetary benefits to the extent of 10 per cent of the new employee’s monthly EPF wages (basic pay and DA) with a maximum limit fixed at Rs 3,000 for two years. The scheme, which was announced in the Union Budget 2024-25, would be applicable for jobs created between August 1, 2025 and July 31, 2027. It has an outlay of Rs 99,446 crores.
The goal of the scheme is invariably ambitious. Assuming an entry-level job in the manufacturing sector gets a day wage of Rs 500 or monthly wages of Rs 15,000 as per the Minimum Wages Act, the employer will get a benefit of Rs 1,500 for each new job created. It would be naive on the part of the government to expect that an industrialist would create a new job merely for the government dole. An employer will recruit a new worker if he or she sees a need for the new resource. This money could have been productively employed if it had been used for improving people’s employability by investing in education or skill development.
