What is ELI Scheme
The Employment Linked Incentive (ELI) Scheme is a government initiative introduced in India during the Union Budget 2024-25. It aims to promote employment generation, workforce formalisation, and support both employees and employers.
Objective: The scheme seeks to create jobs, formalize the labour force, and provide social security to workers by leveraging the Employees’ Provident Fund Organisation (EPFO) framework.
Key Features:
- Targets employees entering formal employment for the first time and incentivizes their registration with EPFO.
- Offers financial incentives to both employers and employees in sectors like manufacturing, MSMEs, and Special Economic Zones (SEZs).
- Encourages broader workforce formalization, providing employees with access to benefits such as Provident Fund contributions and social security measures.
Implementation Focus:
- The scheme’s rollout involves collaboration between multiple ministries, including the Ministries of Labour, Finance, and Commerce.
- Awareness campaigns are planned to ensure participation from industries, employers, and workers.
Long-term Vision:
- Aims to support inclusive economic growth by integrating informal sector workers into the formal economy.
- Reduces hiring costs for employers while ensuring long-term benefits like job security and structured financial stability for employees.
This scheme represents a significant step in transforming India’s labour market and enhancing social security coverage for workers.
Key Components of the ELI Scheme
The scheme comprises three components:
1. Scheme A: For First-Time Employees
Benefit: First-time employees with a monthly salary of up to ₹1 lakh are eligible for a wage subsidy of up to ₹15,000, paid in three instalments. This support helps employees in their initial working days.
Conditions:
- Employees must complete a mandatory financial literacy course to access the second instalment of the subsidy.
- If the employment is terminated within 12 months, the employer is required to refund the subsidy provided under the scheme.
Eligibility: Employees must register with the Employees’ Provident Fund Organisation (EPFO) and link their Aadhaar with their bank account.
Objective: Helps new employees transition into formal employment and enhances job security.
2. Scheme B: For Job Creation in Manufacturing
Benefit: Both employers and employees in the manufacturing sector receive incentives proportional to EPFO contributions for the first four years of employment.
- Year 1 and 2: 24% of wages (12% from the employer and 12% from the employee) is incentivized equally for both parties.
- Year 3: The incentive is reduced to 16%, likely split as 8% each for the employer and employee.
- Year 4: The incentive is further reduced to 8%, likely allocated as 4% each for employer and employee.
Eligibility: Employers must maintain a baseline level of increased employment and have at least three years of EPFO contributions. Employees must earn up to ₹1 lakh/month.
Objective: Encourages the manufacturing industry to hire new workers and expand the formal labour force.
3. Scheme C: Employer Support Across Sectors
Benefit: Employers receive a reimbursement of up to ₹3,000 per month for each new employee earning up to ₹1 lakh. This reimbursement is provided for two years and aims to reduce hiring costs, encouraging businesses to expand their workforce.
Eligibility: Employers need to increase their workforce beyond the previous year’s baseline.
- Smaller Entities: Must add at least two new employees.
- Larger Entities: Must add at least five new employees.
Objective: This scheme is designed to incentivize workforce expansion across all sectors, making it easier for businesses to onboard new employees by offsetting a portion of their initial costs. This, in turn, helps boost employment opportunities and supports economic growth.
How to Access the Benefits
For Employees:
- Activate UAN via EPFO Member Portal:
- Visit the EPFO member portal.
- Select the “Activate UAN” option under “Important Links.”
- Provide your UAN, Aadhaar Number, Name, Date of Birth, and Mobile Number linked to Aadhaar.
- Verify using an Aadhaar OTP. Once verified, your UAN will be activated, and a password will be sent to your mobile number.
- Link Aadhaar to UAN:
- Log in to the EPFO Member e-Sewa portal with your credentials.
- Go to the “Manage” tab and select “KYC.”
- Add Aadhaar details under “Add KYC” and save.
- EPFO will verify your Aadhaar details with UIDAI. Successful verification completes the linkage.
- Link Aadhaar to Bank Account:
- Visit your bank’s internet banking portal.
- Look for an option to update or link Aadhaar under account services.
- Enter your Aadhaar number and confirm. You’ll receive a confirmation message once the process is complete.
These steps ensure employees are eligible to receive benefits under the scheme, such as direct subsidies and formal employment recognition.
For Employers:
- Maintain EPFO Contributions:
- Employers must ensure regular contributions to EPFO for eligible employees.
- Hire Eligible Employees:
- Ensure new hires meet scheme conditions, such as salary and Aadhaar registration.
- Reimbursement Process:
- Employers must register for reimbursements and follow EPFO guidelines to claim benefits. This involves maintaining records of increased workforce numbers and fulfilling baseline requirements.
These steps are critical to participating in the ELI Scheme and accessing benefits like subsidies and workforce expansion incentives.
Implementation and Goals
The scheme aims to create over two crore jobs in two years by fostering employment in various sectors, including MSMEs, manufacturing, and Special Economic Zones. It also emphasizes workforce formalization and social security benefits for employees.
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