ELI Scheme starts from August 1: Youths will get Rs 3000 monthly with this new scheme
ELI Scheme: The Employee Linked Incentive (ELI) Scheme is a significant government initiative in India aimed at boosting formal job creation and enhancing social security, particularly for youth entering the workforce for the first time. ELI Scheme starts from August 1: Youths will get Rs 3000 monthly with this new scheme.
Announced in the Union Budget 2024-25, it came into effect from August 1, 2025, and is applicable for jobs created between August 1, 2025, and July 31, 2027.
Details of ELI Scheme:
Overall Objective:
To incentivize the creation of more than 3.5 crore jobs in the country over two years. To encourage formalization of the workforce by bringing more people under the Employees’ Provident Fund Organisation (EPFO) coverage.
To support employment generation across all sectors, with a special focus on the manufacturing sector.
Key Components and Incentives:
The ELI Scheme primarily has two parts:
Part A: Incentives for First-Time Employees
Target Beneficiaries: First-time employees registered with EPFO.
Eligibility: Employees with a monthly salary up to Rs 1 lakh.
Benefit: One month’s EPF wage, capped at Rs 15,000.
Disbursement: This amount is paid in two installments:
First installment: After 6 months of continuous EPFO-enrolled employment.
Second installment: After 12 months of continuous service and successful completion of a mandatory financial literacy course.
Payment Mechanism: Direct Benefit Transfer (DBT) to the employee’s Aadhaar-linked bank account.
Additional Benefit: A portion of the incentive may be kept in a savings instrument for a fixed period to encourage saving habits.
Part B: Support to Employers
Target Beneficiaries: Employers who generate additional employment.
Eligibility (General): Establishments registered with EPFO must hire at least two additional employees (for employers with less than 50 employees) or five additional employees (for employers with 50 or more employees), with sustained employment for at least six months.
Eligibility (Manufacturing Sector – extended benefits): Employers in the manufacturing sector with a 3-year track record in EPFO, who hire at least 50 non-EPFO workers or 25% of their baseline (whichever is lower).
Benefit to Employer: Monthly incentives for each additional employee with a salary up to ₹1 lakh. The incentive amount varies based on the employee’s EPF wage:
Up to Rs 10,000 EPF wage: Up to Rs 1,000 per month
More than Rs 10,000 and up to Rs 20,000 EPF wage: Rs 2,000 per month
More than Rs 20,000 (up to Rs 1 lakh salary): Rs 3,000 per month
Duration of Incentive:
All sectors: For a period of two years for each additional employee.
Manufacturing sector: Incentives are extended for the 3rd and 4th years as well.
Payment Mechanism: Directly into the employer’s PAN-linked bank account.
Key Highlights:
Budget Outlay: The scheme has a significant budget outlay, with a total package of Rs 2 lakh crore for youth employment, skilling, and other opportunities. The ELI Scheme specifically has an outlay of approximately Rs 99,446 crore.
Focus on Formalization: By linking incentives to EPFO registration, the scheme aims to bring more workers into the formal economy, providing them with social security benefits.
Job Creation Target: Aims to create over 3.5 crore jobs, with 1.92 crore beneficiaries being first-time employees.
Implementation Period: Benefits are applicable for jobs created between August 1, 2025, and July 31, 2027.
Mandatory Financial Literacy: For first-time employees, completing a financial literacy program is a condition for receiving the second installment of the incentive, promoting financial awareness among new entrants.
In essence, the ELI Scheme is a dual-pronged approach by the Indian government to stimulate job growth, support new employees, and encourage employers to expand their workforce, especially in sectors like manufacturing.
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