Youth to Get a Job Boost as Government Launches ₹1 Lakh Crore Employment Incentive Scheme

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a landmark Employment Linked Incentive (ELI) Scheme aimed at boosting job creation, enhancing youth employability, and ensuring social security. The scheme places special focus on the manufacturing sector while covering all employment-generating industries.

Budget and Target:

With an outlay of ₹99,446 crore, the ELI scheme aims to create over 3.5 crore new jobs over the next two years. The benefits of the scheme will apply to jobs created between 1st August 2025 and 31st July 2027.

Two-Part Scheme Design:

1. The ELI Scheme consists of two key components:
2. Part A: Direct Benefits to First-Time Employees
3. Youth registering with the Employees' Provident Fund Organisation (EPFO) for the first time will receive incentives equivalent to one month’s wage (up to ₹15,000), disbursed in two installments.
4. The first installment will be given after 6 months of continuous employment, while the second installment will be released after 12 months, upon completion of a financial literacy course.
5. A portion of the incentive will be deposited in a savings or fixed deposit account, which can be accessed by the employee at a later date.
6. Around 1.92 crore youth are expected to benefit under this component.

Part B: Incentives for Employers to Create New Jobs:

Employers creating additional jobs in any sector, especially manufacturing, will receive monthly incentives based on the salary of new hires:

1. ₹1,000 per month for salaries up to ₹10,000
2. ₹2,000 per month for salaries between ₹10,001–₹20,000
3. ₹3,000 per month for salaries above ₹20,000 (up to ₹1 lakh)

The incentive will be provided for two years, with an extension to four years for the manufacturing sector.

Eligibility Criteria:

1. Firms with less than 50 employees must hire at least 2 additional workers.
2. Firms with 50 or more employees must hire at least 5 new workers.
3. This part of the scheme is expected to result in the creation of 2.6 crore additional jobs.

Transparent and Direct Payment Process:

Benefits under Part A will be transferred directly to the employees’ Aadhaar-linked bank accounts through Direct Benefit Transfer (DBT).
Incentives under Part B will be deposited into the PAN-linked bank accounts of eligible employers.

A Strategic Move towards Job Formalization:

This ambitious scheme not only aims to accelerate job creation but also seeks to formalize the workforce by linking more employees with social security systems like EPFO. It reflects the government’s broader mission to empower the youth, reduce informal employment, and strengthen the economic foundation of the country through sustained job growth.

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