Jobs on Paper, Not the Ground? The Problem With New ELI Scheme

After announcing it in July 2024 Budget as part of ambitious Prime Minister Rojgar Yojana (PMRY), the government finally approved, on 1 July of this year, the Rs 99,446 crore employment linked incentive (ELI) scheme which aims to generate 3.5 crore jobs, including 1.92 crore first-time jobs.The approved scheme significantly dilutes the incentives and standards of the ELI scheme announced in 2024-25 budget. Still, the key questions remain:Will it create 3.5 crore jobs? What kind of jobs? Will they be quality jobs, or will the scheme merely inflate the Employee Provident Fund Organisation (EPFO) registration figures?The Internship Scheme, announced as part of the PMRY to provide 1 crore internships to youth, is in doldrum. There are talks of merging it with the ELI scheme. But can such a merger salvage it? 'Jobs' vs 'Employment': How Govt Switches Terms to Hide Reality of Job CreationAs announced in the 2024–25 Budget, the PMRY included three ELI schemes: ELI Scheme A: First-timers envisaged to create 2.1 crore new first-timer jobs over a two-year period by paying Rs 15,000 subsidy/incentive towards one month’s wage to youth, employed first time on jobs, with salary not exceeding Rs 1 lakh a month.ELI Scheme B: Job creation in manufacturing targeted bulk hiring of 30 lakh first-timers’ in manufacturing jobs by promising large incentives (24 percent of wages first two years, 16 percent in third and 8 percent in fourth) to established employers (minimum three-year EPFO track record) for creating 50 or 25 percent of existing EPFO registered employees jobs. ELI Scheme C: Support to employers targeted 50 lakh job creation by non-manufacturing employers by promising support of upto Rs 3,000 per month per employee if they employed of at least two (with less than 50 employees) and five (with more than 50 employees) for two years. For those generating more than 1000 jobs, the incentive was to continue in third and fourth year at the Scheme B rate. Assuming 50 percent old hires in Scheme C, the ELI programme aimed at creating 2.35 crore jobs at an outlay of Rs 1.07 lakh crore. The ELI scheme approved on 1 July 2025 aims to create more jobs (3.5 crore) at lesser outlay (Rs 0.99 lakh crore). This ‘higher’ jobs target comes on account of dilution of the rigour of ELI.The goal of creating 30 lakh new manufacturing jobs is gone with the Scheme B announced in Budget 2024-25 being completely dropped. The ambition of attracting large employers (creating more than 1,000 jobs) for non-manufacturing sector has also been given up. The new approved ELI has two parts:Part A: promises to pay one-month salary (subject to maximum of Rs 15,000 per month) to 1.92 crore first-time employes. The remaining 1.58 crore target (out of total 3.5 crore), there will actually be no additional job creation, as these will be filled from old employees switching jobs. Part B provides incentives to employers only. They will get 10 percent of wages for jobs upto Rs 10,000 per month wages, Rs 2,000 for jobs in wage slab Rs 10,000- 20,000 and Rs 3,000 for jobs with higher than Rs. 20,000 wages for employing a person for at least six months. An employer can get up to Rs. 36,000 per person employed for a year as ELI incentive. Crucially, the requirement of creating new jobs has been removed. Any of about 7.6 lakh EPFO registered establishments can hire two additional employees (with less than 50 employees) and five (with more than 50 employees), and get an incentive. Part B incentive claim procedure and structure is easy to game. Get two or more new employees (with their Aadhaar cards) registered with EPFO and claim incentives upto Rs 72,000 incentive in two years. That is all.Expect old and new establishments to generate papers, with or without creating jobs, to claim these ELI incentives.How India Can Increase its Defence Budget In the past four years, the EPFO has reported net additions to its employee payroll ranging from 1.22 crore (2021–22) to 1.39 crore (2022–23). Between 52,309 establishments (in 2024–25) and 62,535 (in 2021–22) reported new hires each year.EPFO thus adds 2.5 crore to its payroll every two years routinely. It is different matter that EPFO categorises all payroll addition data provisional and makes a routine disclaimer that new hires includes temporary workers, and their employers may not submit contributions in future.With such a track-record, adding 1.92 crore new first-time jobs under ELI to EPFO payroll over next two years beginning 1 August 2025 should be quite an easy task for EPFO and its registered establishments. The government had originally announced 1 crore internships scheme under PMRY in the July 2024 Budget. However, it quickly shrank the plan into a pilot scheme offering just 1.25 lakh internships in Round 1 (October–December 2024). Of these, only 82,000 were offered, and the actual number availed is not officially disclosed- it is possibly not even half of the offered. For Round 2 (Jan-March 2025), the government offered 1.18 lakh plus internships, and expected organisations offering internships and youth seeking internships to apply by 31 March 2025. There is no public announcement of how many companies applied and how many internships were offered. This task seems to be still ongoing.Officials of the Ministry of Corporate Affairs (MoCA), which administers the Internship Scheme, told the media that they had held discussions with the Ministry of Labour and Employment (MoLE), which operates the ELI schemes, about combining the two schemes by integrating internship scheme in the ELI. The fact that such unofficial briefings have been made, without announcing results of Round 2 of internship scheme, suggests that Internship Scheme is in deep trouble.Notable, the Internship scheme is not an apprenticeship scheme. Merging the internship scheme into ELI will only lead to the top companies getting off the hook. The scheme will lose its identity and recognition, which would mark formal end of the scheme.In July 2024, the PMRY, with its five scheme parts, was announced at the grandiose scale in the 2024-25 Budget. It was the biggest announcement in that budget. The details of the five schemes provided in the Annexure to the Finance Minister’s speech made it quite apparent that the announcement was made without doing a good homework and thinking it through. It came to haunt the government. Over the course of 2024–25, detailed ELI schemes couldn’t be finalised, and the Internship Scheme has collapsed.The government has now sacrificed the ambition to create manufacturing jobs or jobs creation by large employers. This highly diluted version would only end up adding numbers to EPFO payrolls without creating real good jobs. The ELI scheme is a perfect example of poor programme craftsmanship in government today. (Subhash Chandra Garg is the Chief Policy Advisor, SUBHANJALI, and Former Finance and Economic Affairs Secretary, Government of India. He's the author of many books, including 'The $10 Trillion Dream Dented, 'We Also Make Policy', and 'Explanation and Commentary on Budget 2025-26'. This is an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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Will Modi Govt's New Rs 99,446 Crore ELI Scheme Create Jobs—or Just Count Them?

The approved scheme significantly dilutes incentives and standards of the ELI scheme announced in 2024-25 budget.

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