Why in NEWS
The Union Cabinet has approved the Employment Linked Incentive (ELI) Scheme, a major component of the ₹2 lakh crore youth employment package announced in Union Budget 2024–25. With an outlay of ₹1 lakh crore, it will be implemented from August 2025 to July 2027, aiming to formalise and boost employment for India’s youth.
Key Concepts and Definitions
| Term | Explanation |
|---|---|
| EPFO | Employees’ Provident Fund Organization, a statutory body managing pensions. |
| DBT | Direct Benefit Transfer system for targeted subsidy and welfare payments. |
| ABPS | Aadhaar Bridge Payment System used for seamless and verified transactions. |
What is the ELI Scheme?
| Component | Features |
|---|---|
| Part A – For Employees | Targets 1.92 crore first-time EPFO-registered employees. EPF wage (up to ₹15,000) given in two installments—6 and 12 months after joining. Final installment linked to financial literacy completion. A portion of payment will go to a fixed savings account. |
| Part B – For Employers | Employers hiring new workers (salary ≤ ₹1 lakh) get up to ₹3,000/month for 2 years. Firms with <50 employees must hire 2, and those with ≥50 must hire 5 new workers, retained for at least 6 months. |
| Incentive Disbursal | Employees paid via Aadhaar-linked DBT. Employers paid via PAN-linked bank accounts. |
Significance of the Scheme
| Benefit | Impact |
|---|---|
| Boost to Private Hiring | Reduces employer burden and incentivises formal job creation. |
| Focus on Youth Employment | Supports first-time jobseekers, especially from disadvantaged sections. |
| Promotes Retention and Upskilling | Ensures longer tenure and financial awareness for workers. |
| Encourages Formalisation | Tied to EPFO registration, expanding formal employment base. |
| Reduces Inequality | Offers support to low-income workers and small enterprises. |
India’s Labour Market Trends (FY 2023–24)
| Sector | Key Highlights |
|---|---|
| Informal | 10.01% YoY growth; “Other Services” sector employed 12+ crore workers. |
| Formal | EPF enrollments up 2.3% to 6.1 million. ESIC up 5.2%, NPS up 6.8%. |
| Overall Trend | Job quality improving; higher social security coverage; better job formalisation. |
In a Nutshell
Memory Code: JOBS
- J – Job creation through incentives
- O – Onboarding of first-time workers
- B – Boost to private hiring and formalisation
- S – Social security and savings culture
Prelims Practice Questions
- Under the ELI Scheme, what is the maximum monthly wage considered for first-time EPFO employees to be eligible?
A. ₹12,000
B. ₹15,000
C. ₹18,000
D. ₹20,000 - Which payment system is used to transfer benefits to first-time employees under the ELI Scheme?
A. UPI
B. PFMS
C. ABPS
D. RTGS - Which of the following is NOT a component of the Employment Linked Incentive Scheme?
A. Fixed savings account for workers
B. Incentives for ESIC contribution
C. Hiring support for employers
D. Financial literacy-linked payment
Mains Practice Questions
- Discuss the role of incentive-based employment schemes like the ELI Scheme in promoting formalisation and job growth in India. (GS-3)
- How can employment-linked incentives reduce youth unemployment and income inequality in India?
( GS – 3 )
Answer Key with Explanations
| Qn | Ans | Explanation |
|---|---|---|
| 1 | B | Employees earning up to ₹15,000/month are eligible for ELI incentives. |
| 2 | C | Aadhaar Bridge Payment System (ABPS) is used for DBT to employees. |
| 3 | B | ESIC contribution incentives are not part of the ELI Scheme. |
