New Delhi [India], July 1 (ANI): Following the Union Cabinet's approval of the Employment Linked Incentive (ELI) Scheme to support employment generation, former secretary of the Ministry of Labour and Employment, Sumita Dawra, said that the scheme is expected to generate over 3.5 crore jobs.

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday approved the Employment Linked Incentive (ELI) Scheme to support employment generation, enhance employability and social security across all sectors, with special focus on the manufacturing sector.

Speaking to ANI about the scheme, former secretary of the Ministry of Labour and Employment, Sumita Dawra, said, 'This scheme was announced in the Union budget 2024-2025 with a historic budgetary announcement of more than Rs 1 lakh crore. The scheme has been prepared with a lot of consultation with industry, trade unions, more than 25 ministries of the government of India, with all the state governments, and with the regional workshops, which were done in the states to consult the industry there and the officers, so it's a consultative approach.'

'The Prime Minister was very clear that the scheme should be simple and effective so that the real benefit of the scheme reaches the youth of the country, particularly the first-timers who are entering the workforce, and also it serves as an incentive for employment generation, particularly in the manufacturing sector... More than 3.5 crore jobs are expected as a result of the scheme.'

Chandrajit Banerjee, Director General of the Confederation of Indian Industry (CII), echoed similar sentiments.

'This is a much-needed and timely intervention. The industry has long advocated for an employment-linked incentive scheme to drive job creation and workforce formalisation,' she said.

Banerjee expressed optimism that the scheme would significantly increase EPFO coverage and bring more workers under the social security net.

Union Minister Ashwini Vaishnaw had earlier briefed the media about the scheme's structure, which is designed in two parts, aiming to ease hiring challenges and encourage employers to recruit young people entering the workforce for the first time.

According to an official release, under the ELI scheme, first-time employees will receive one month's wage up to Rs 15,000.

Employers will receive incentives for two years for generating additional employment, with extended benefits for an additional two years in the manufacturing sector.

The ELI Scheme was announced in the Union Budget 2024-25 as part of the PM's package of five schemes to facilitate employment, skilling and other opportunities for 4.1 crore youth with a total budget outlay of Rs 2 lakh crore.

With an outlay of Rs 99,446 Crore, the ELI Scheme aims to incentivise the creation of more than 3.5 crore jobs in the country over 2 years.

Out of these, 1.92 Crore beneficiaries will be first-time entrants into the workforce. The benefits of the Scheme will apply to jobs created between August 1, 2025, and July 31, 2027.

The scheme consists of two parts, with Part A focused on first timers and Part B focused on employers.

Targeting first-time employees registered with EPFO, this Part will offer a one-month EPF wage up to Rs 15,000 in two instalments. Employees with salaries up to Rs 1 lakh will be eligible.

The 1st instalment will be payable after 6 months of service, and the 2nd instalment will be payable after 12 months of service and completion of a financial literacy programme by the employee.

To encourage the habit of saving, a portion of the incentive will be deposited into a savings instrument or deposit account for a fixed period and can be withdrawn by the employee at a later date.

Part A will benefit around 1.92 crore first-time employees, while Part B will provide support to employers.

This part will cover the generation of additional employment in all sectors, with a special focus on the manufacturing sector. Employers will receive incentives for employees with salaries up to Rs 1 lakh.

The Government will incentivise employers, up to Rs 3000 per month, for two years, for each additional employee with sustained employment for at least six months. For the manufacturing sector, incentives will also be extended to the 3rd and 4th years.

Establishments registered with EPFO will be required to hire at least two additional employees (for employers with fewer than 50 employees) or five additional employees (for employers with 50 or more employees) on a sustained basis for at least six months.

All payments to the first-time employees under Part A of the Scheme will be made through the DBT (Direct Benefit Transfer) mode using the Aadhar Bridge Payment System (ABPS). Payments to the Employers under Part B will be made directly into their PAN-linked Accounts.

With the ELI Scheme, the government intends to catalyse job creation in all sectors, particularly in the manufacturing sector, while also incentivising young people joining the workforce for the first time.

An important outcome of the Scheme will also be the formalisation of the country's workforce by extending social security coverage for crores of young men and women. (ANI)