The launch of the Employment Linked Incentive (ELI) scheme has been delayed as the Ministry of Labour and Employment is waiting for the Union Cabinet approval of the initiative that carries an outlay of over ₹10,000 crore for pushing job creation and employability, the Standing Committee on Labour, Textiles and Skill Development said in its report tabled in parliament on Monday.

The ELI scheme, which was meant to be launched on August 1 following its announcement in the budget speech the previous month, is part of the ‘Prime Minister’s Package for Employment and Skilling’. The incentives will be provided based on the enrolment of employees in the EPFO.

Employees earning not more than ₹1 lakh per month will be provided one month’s wage, up to ₹15,000, in three instalments.

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The Ministry told the parliamentary panel that “…a draft Cabinet note has been prepared and is under submission for approval of the competent authority for further submission to DOE/Cabinet Secretariat”.

The draft note was prepared after seeking suggestions from various ministries and departments. There are three parts of the ELI scheme — Part A is for first-timers and will benefit more than 2.1 crore first-time employees.

Similarly, Part B is for about 30 lakh employees and is restricted to the manufacturing sector, while Part C is for employers to benefit from hiring and wage incentives under the scheme. 

Part C will benefit about 50 lakh jobs for first-timers and rejoiners.

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Under the ELI scheme, ₹22,333 crore has been earmarked for the period from FY 2024-25 to FY 2027-28, according to the parliamentary report on the demands for grants for 2024-25 by the Ministry of Labour and Employment.

Likewise, the second part of the scheme involves an outlay of ₹48,326 crore for FY 2024-25 to FY 2030-31, and the scheme will incentivise additional employment in the manufacturing sector. It will be linked to the employment of in-sourced first-time employees earning a wage not exceeding ₹1 lakh per month.

An incentive will be provided to both the employee and employer with regard to their EPFO contribution in the first 4 years of employment.

The final part of the scheme would involve an expenditure of ₹36,040 crore for FY 2024-25 to FY 2030-31. It will incentivise employers across all sectors who create additional employment over and above the prescribed threshold and sustain a higher level, the report stated.

The government will reimburse employers up to ₹3,000 per month for 2 years towards their EPFO contribution for each additional employee.

The Ministry has set a two-year enrolment period, from August 2024 to July 2026, for the ELI scheme.

On the Committee pointing out that the estimated financial outlay for FY 2024-25, which is ₹6,852.43 crore for the three ELI schemes, does not match the BE of ₹10,000 crore, the Ministry said, “In the Budget Speech for the Financial Year 2024-25, the ELI Scheme was announced, and in the Detailed Demand for Grants, provisions of ₹10,000 crore were made by the Ministry of Finance. However, considering the limited time available during the current financial year and the eligibility conditions and sustainability of the additional employment targeted, the estimated expenditure during the current financial year is expected to be lower than the Budget Estimates of ₹10,000 crore”.

The Ministry, at the same time, noted that the expenditure under the scheme is expected to increase in the next FY.

Employees’ Provident Fund Organisation (EPFO), in consultation with this Ministry, has taken various initiatives for the implementation of the scheme.

Among them is a “Programme Management Unit”, consisting consultants, professionals, officials of EPFO, statisticians, etc., that has been set up to manage and monitor the activities related to the scheme.

The Ministry is also preparing to give wide publicity to the scheme to make prospective employees and employers aware of the ELI scheme.

Adequate IT infrastructure is also being developed in consultation with the Ministry of Electronics and Information Technology for the preparation of a software system to ensure the smooth operation of applicant registration, disbursal of incentive/subsidy details, and particulars of each employee/employer availing benefits from the scheme.

Finally, the Ministry will offer a grievance redressal mechanism for the beneficiaries of the scheme.