EMPLOYMENT-LINKED INCENTIVE SCHEME (Syllabus: GS Paper 3 – Economy)

Context: The Union Minister has urged for the prompt implementation of the Employment-Linked Incentive (ELI) Scheme, introduced in the Union Budget 2024-25.

Employment-Linked Incentive (ELI) Scheme

• About: It is designed to facilitate job creation, and provide incentives to employers and employees.
• Aim: The ELI Scheme aims to create over 2 crore jobs within two years, significantly enhancing employment opportunities and livelihoods across the country.
• Announcement: The Union Budget 2024-25 introduced three schemes under the Employment-Linked Incentive initiative, as part of the Prime Minister’s package of five schemes and initiatives.
• Nodal Agency: Ministry of Labour and Employment
• Focus on Youth: These schemes are designed to facilitate employment, skilling, and other opportunities for 4.1 crore youth over a five-year period.
• Financial Allocation: A central outlay of Rs. 2 lakh crore has been allocated for these schemes to achieve the set objectives.

Provisions of the ELI Scheme

• Financial Incentives for Hiring: Companies receive financial rewards for hiring new employees, reducing labor costs compared to automation investments.
• Eligibility and Incentive Structure: The scheme applies to various sectors with specific eligibility criteria and structured incentives based on the number of new hires.
• Monitoring and Compliance: Participating companies must adhere to regular monitoring and verification processes and provide necessary documentation to claim incentives.
• Special Provisions for SMEs: The scheme includes specific measures for Small and Medium Enterprises (SMEs), addressing their unique challenges and promoting their role in job creation.