{"id":53579,"date":"2025-07-06T13:31:57","date_gmt":"2025-07-06T08:01:57","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=53579"},"modified":"2025-07-07T17:45:23","modified_gmt":"2025-07-07T12:15:23","slug":"promise-and-pitfalls-of-indias-%e2%82%b999446-crore-employment-linked-incentive-scheme","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/promise-and-pitfalls-of-indias-%e2%82%b999446-crore-employment-linked-incentive-scheme\/","title":{"rendered":"Promise and Pitfalls of India\u2019s \u20b999,446 Crore Employment-Linked Incentive Scheme"},"content":{"rendered":"<h2><b>Employment-Linked Incentive Scheme Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Union Cabinet has approved an Employment-Linked Incentive (ELI) scheme with a budget of \u20b999,446 crore, as announced in the 2024\u201325 Union Budget.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Aimed at boosting job creation, especially in the manufacturing sector, the ELI scheme is part of the Prime Minister\u2019s broader five-scheme employment package, which also includes internships with major companies and youth skill development initiatives.<\/span><\/li>\n<\/ul>\n<h2><b>Key Provisions of the Employment-Linked Incentive (ELI) Scheme<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Implementation duration<\/b><span style=\"font-weight: 400;\">: August 1, 2025 \u2013 July 31, 2027<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Implementing Agency:<\/b><span style=\"font-weight: 400;\"> Employees Provident Fund Organisation (EPFO)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Goal:<\/b><span style=\"font-weight: 400;\"> Create over 3.5 crore jobs in two years<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Expected Beneficiaries:<\/b><span style=\"font-weight: 400;\"> 1.92 crore newly employed individuals<\/span><\/li>\n<\/ul>\n<h3><b>Employee Benefits<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Eligibility:<\/b><span style=\"font-weight: 400;\"> Salaries up to \u20b91 lakh\/month<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Incentive:<\/b><span style=\"font-weight: 400;\"> One-month EPF wage (up to \u20b915,000)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Disbursal:<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">1st instalment after 6 months of service<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">2nd instalment after 12 months<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Mode:<\/b><span style=\"font-weight: 400;\"> Direct bank transfer<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Savings Component:<\/b><span style=\"font-weight: 400;\"> Part of the benefit will go into a <\/span><b>fixed deposit account<\/b><span style=\"font-weight: 400;\">, withdrawable later<\/span><\/li>\n<\/ul>\n<h3><b>Employer Incentives<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Eligibility<\/b><span style=\"font-weight: 400;\">: Establishments registered with EPFO<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Support:<\/b><span style=\"font-weight: 400;\"> Up to \u20b93,000\/month for each new employee retained for at least 6 months, for two years<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For manufacturing firms, the incentives extend to the 3rd and 4th years as well<\/span><\/li>\n<\/ul>\n<h2><b>Employers\u2019 Response to the Employment-Linked Incentive (ELI) Scheme<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Employers have called the ELI scheme a \u201claudable initiative\u201d that encourages first-time employment and sustained job creation, especially in manufacturing.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They highlighted the scheme\u2019s potential to <\/span><b>boost labour-intensive sectors<\/b><span style=\"font-weight: 400;\"> and <\/span><b>transform India\u2019s employment ecosystem<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Industry experts stressed the need to include <\/span><b>micro and small manufacturing units<\/b><span style=\"font-weight: 400;\">, especially those <\/span><b>with fewer than 20 employees<\/b><span style=\"font-weight: 400;\">, under the scheme\u2019s benefits.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">They proposed shifting the scheme to the <\/span><b>Ministry of MSME<\/b><span style=\"font-weight: 400;\"> and using a <\/span><b>structured reimbursement model<\/b><span style=\"font-weight: 400;\"> based on payroll growth.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Experts suggested a <\/span><b>direct monthly subsidy<\/b><span style=\"font-weight: 400;\"> to both employer and employee, tied to continued employment, for <\/span><b>simpler and wider adoption<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2><b>Trade Union Response and Concerns on the ELI Scheme<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Bharatiya Mazdoor Sangh (BMS) has welcomed the scheme but called for expanding social security and improving job quality.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The other 10 central trade unions have criticised the scheme, citing risks and past experiences.<\/span><\/li>\n<\/ul>\n<h3><b>Fear of Misuse of Funds<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unions fear that the ELI scheme could <\/span><b>divert workers&#8217; savings<\/b><span style=\"font-weight: 400;\"> to subsidise employers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They referenced the 2020 Production-Linked Incentive (PLI) scheme, where benefits reportedly went to large firms without meaningful job creation.<\/span><\/li>\n<\/ul>\n<h3><b>Concerns Over EPFO\u2019s Role<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>EPFO is a custodian of employee savings<\/b><span style=\"font-weight: 400;\">, not a job-creating body.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unions question how it can implement an incentive scheme without <\/span><b>dedicated government funding<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h3><b>Call for a Separate Implementation Body<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">There is growing demand for the creation of a <\/span><b>specialised agency<\/b><span style=\"font-weight: 400;\"> to administer the scheme, instead of placing the responsibility on <\/span><b>EPFO<\/b><span style=\"font-weight: 400;\">, which lacks the <\/span><b>mandate and mechanism for employment generation<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h3><b>Other Concerns<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Quality vs Quantity Trade-off<\/b><span style=\"font-weight: 400;\"> &#8211; Firms may focus on hiring more rather than hiring skilled or productive workers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Short-Term Gains<\/b><span style=\"font-weight: 400;\"> &#8211; Risk of firms inflating hiring temporarily to gain benefits, without long-term employment commitment.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Implementation Challenges<\/b><span style=\"font-weight: 400;\"> &#8211; Requires robust verification mechanisms to prevent misuse and false reporting of employment data.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Skewed Sectoral Impact<\/b><span style=\"font-weight: 400;\"> &#8211; May benefit larger firms with better compliance systems, leaving out MSMEs that employ a majority.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <a href=\"https:\/\/www.thehindu.com\/news\/national\/what-are-the-pros-and-cons-of-the-employment-linked-incentive-scheme-explained\/article69777666.ece#:~:text=As%20the%20EPFO%20has%20no,agency%20to%20implement%20the%20scheme.\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">TH |<\/span><\/a><span style=\"font-weight: 400;\">\u00a0<\/span><a href=\"https:\/\/economictimes.indiatimes.com\/news\/economy\/policy\/employment-linked-incentive-scheme-who-will-benefit\/articleshow\/122235235.cms?from=mdr\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">ET<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understand the ELI scheme&#8217;s benefits, employer feedback, trade union concerns, and its impact on job creation and labour reforms.<\/p>\n","protected":false},"author":18,"featured_media":53708,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[1253,60,22,59],"class_list":{"0":"post-53579","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-employment-linked-incentive-scheme","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/53579","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=53579"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/53579\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/53708"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=53579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=53579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=53579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}