Cabinet Approves Employment Linked Incentive Scheme

On 1st July 2025, the Union Cabinet approved the Employment Linked Incentive (ELI) Scheme to boost large-scale job creation and extend social security to India’s growing workforce.

Key Points

Massive Job Creation Goal: The ELI Scheme aims to create over 3.5 crore jobs between August 1, 2025, and July 31, 2027, with 1.92 crore first-time entrants into the workforce.
Budget Outlay: The total budget for the scheme stands at Rs. 99,446 crore, as part of the Prime Minister’s five-scheme youth employment and skilling package announced in Budget 2024–25.
Employee Incentives:
- First-time EPFO-registered employees will receive an incentive equal to one month’s wage (capped at Rs. 15,000).
- Payment will be made in two instalments—after 6 and 12 months of continuous service, with the latter tied to completion of a financial literacy programme.
- A portion of the incentive will be saved in a fixed deposit or savings instrument.
Employer Incentives:
- EPFO-registered employers will get up to Rs. 3,000/month for each new hire retained for at least 6 months.
- Incentive slabs: Rs. 1,000 for salaries up to Rs. 10,000; Rs. 2,000 for Rs. 10,000–Rs. 20,000; Rs. 3,000 for Rs. 20,000–Rs. 1,00,000.
- Eligibility requires hiring a minimum of 2 new employees (for firms <50 employees) or 5 (for larger firms).
- In manufacturing, incentives will be extended for up to 4 years.
Payment Mechanism:
- Direct Benefit Transfer to employees via Aadhaar Bridge Payment System.
- Employer benefits to be credited to PAN-linked bank accounts.