India is experiencing rapid economic growth, with its global prominence increasing significantly. Economic reforms are gaining momentum. While all this is true, a crucial question remains unanswered, challenging the sustainability of this impressive development story: “Where are the jobs in the country, and how stable are they?” The Central Government’s recently approved “Employment Linked Incentive (ELI) Scheme” offers a fresh ray of hope as a strong answer to this question. Approved by the Union Cabinet on July 1, 2025, this scheme will be implemented from August 1, 2025. Unlike previous employment schemes that were limited to wage support, the ELI scheme has a much broader vision, with clear objectives, specific implementation methods, and targeted beneficiaries.
*Ambitious Goals and Optimistic Outlook:
The primary objective of this scheme is to create a staggering 3.5 crore new jobs within the next two years, by July 31, 2027! A substantial amount of ₹99,446 crores has been allocated for this ambitious target. It’s important to understand that this fund is not just for the 2025-26 financial year but for the entire duration of the scheme. The disbursement of these funds will depend on the scheme’s adoption and the actual number of jobs created.
Another key objective of this scheme is to create long-term employment and bring workers into the formal sector. It focuses on providing direct benefits to both employees and organizations. A strategic goal of the scheme is to provide social security benefits by linking incentives with Employees’ Provident Fund Organisation (EPFO) registration. This means not just a job, but a job coupled with social security. The scheme aims to provide financial assistance to new employees joining the formal workforce and to employers for creating additional, stable jobs, thereby enhancing employment potential and social security. Additionally, a crucial aim is to provide special impetus to job creation, with a particular focus on our manufacturing sector. Providing direct financial assistance to youth entering the job market for the first time is another significant objective of this scheme.
*Implementation Methods- Two Paths, One Destination:
To achieve these ambitious goals, the scheme has been designed with two distinct components. The first, “Part A,” directly benefits young people securing their first job. Those earning a monthly salary of less than one lakh rupees are eligible. After six months of continuous service, an incentive equivalent to one month’s EPF wages (maximum ₹15,000) will be directly transferred to their PAN-linked account through DBT (Direct Benefit Transfer). Another installment will be received after completing one year, but only after completing financial literacy training. This approach is a well-thought-out visionary effort that fosters both financial assistance and saving habits, promoting financial stability.
*Benefits for Employers Too!
The second component is “Part B,” which provides incentives to organizations, i.e., employers. To be eligible, employers must be registered with EPFO and demonstrate the creation of additional, stable jobs. Small organizations with fewer than 50 employees must hire at least two additional employees continuously for a minimum of six months. Larger organizations with 50 or more employees must hire at least five additional employees during the same period. This incentive applies to new employees earning up to ₹1 lakh per month. Employers will receive monthly financial assistance for each additional employee, based on the employee’s EPF wage slab. Organizations can receive incentives based on their salary level as follows: ₹1,000 for salaries below ₹10,000; ₹2,000 for salaries between ₹10,000 and ₹20,000; and ₹3,000 for salaries between ₹20,000 and ₹1 lakh. This assistance will generally be available for two years.
These payments will also be directly transferred to employers’ PAN-linked accounts. However, with special emphasis on the manufacturing sector, this will be extended for a third and fourth year. This special focus on the manufacturing sector is not an arbitrary decision. It is considered a crucial sector for India’s economic self-reliance, leading to stable jobs, skill development, and improved productivity. The Micro, Small, and Medium Enterprises (MSME) sector contributes over 30% to the total employment in the country, with over 6.3 crore small enterprises. Of these, 90% have fewer than 50 employees. This means the scheme has the potential to further boost small industries and increase harmony in employment.
Currently, India’s domestic manufacturing sector accounts for 17% of the GDP. The government’s target is to increase this to 25%. According to the Ministry of Labour’s analysis, the job creation potential in the manufacturing sector is twice that of other sectors. Hence, a four-year incentive is the right policy to promote this sector. Through this scheme, approximately 2.6 crore jobs are expected from the manufacturing sector, and 1.92 crore first-time employees are also likely to benefit directly. This truly offers an optimistic outlook, making the overall target of 3.5 crore jobs seem achievable. Compared to previous schemes, this one is truly new and different. For example, the “Atmanirbhar Bharat Rojgar Yojana” implemented during the COVID-19 pandemic offered only temporary assistance. This scheme, however, goes beyond welfare, aiming for long-term security. Financial literacy training, a DBT-based transparent system, and a special focus on the manufacturing sector make this scheme stand out.
From 2023 to 2024, the country’s unemployment rate was 6.1%. According to statistics, unemployment was 5.4% in rural areas and 7.7% in urban areas. If the number of regular jobs, especially in urban areas, increases through this scheme, this rate is likely to decrease. Considering this background, this scheme, by creating employment opportunities for approximately 1.75 crore people annually, will be a major step towards reducing youth unemployment.
*A New Chapter in the Field of Employment:
This scheme opens a new path for Indian youth, especially those starting their careers. Employment is not just a livelihood; it’s a path to dignity and security. This scheme reflects the goal of filling every home with true happiness, not just statistical welfare. If this experiment succeeds, it has the potential to open a new chapter in India’s employment sector. Viewed in this way, it’s not just a plan but a crucial step that paves the way for significant changes.
Implementation is Key
The success of this scheme hinges on its implementation. Can organizations truly hire new employees? Will employees fully utilize this opportunity? Will monitoring, data collection, and evaluation mechanisms at central and state levels be effectively implemented? The real test will be whether DBT can be implemented without delays, especially in smaller towns and areas with fewer technical resources.
For this scheme to succeed, the government needs to establish a robust IT infrastructure, national awareness programs, service support centers, and public dashboards for people to access details. If financial literacy training is not provided in accessible local languages, it could become a barrier to the scheme. This scheme will undoubtedly pave a golden path for the future of our nation’s youth.
