To boost the manufacturing sector and employment generation, the Government’s Union Budget 2024 on Tuesday announced a new incentive scheme, the Employment Linked Incentive Scheme.
This initiative comes under the Prime Minister’s Package for Employment and Skilling.
“An incentive will be provided at a specified scale directly to both the employee and the employer with respect to their EPFO contribution in the first four years of employment. The scheme is expected to benefit 30 lakh youth entering employment, and their employers,” stated Nirmala Sitharaman while announcing the Union Budget 2024 on Tuesday in Lok Sabha.
Encouraging substantial hiring
The scheme aims to encourage substantial hiring of freshers in the manufacturing industry by providing incentives to both employers and employees.
Eligible employers, including corporate entities and stable non-corporate entities, will be required to hire a minimum of 50 or 25% of the previous year’s EPFO employees as new workers.
Four-year incentive plan
In return, the government will provide incentives for four years, shared equally between the employer and the employee.
The incentive rate will be 24% of the salary in the first two years, reducing to 16% in the third year and 8% in the fourth.
A push towards ‘Made in India’
The scheme, expected to benefit 30 lakh young people, is part of the government’s larger push to create employment opportunities in the manufacturing sector.
It is seen as a significant step towards realising the government’s vision of a ‘Made in India’ economy.
To ensure job security, employers must maintain the increased employment level throughout the incentive period. The scheme is applicable to employees earning up to Rs 1 lakh per month, with a maximum incentive calculation based on a salary of Rs 25,000 per month.
The government has also introduced safeguards to prevent misuse of the scheme. If an employee leaves within a year of joining, the employer will have to refund the subsidy.
The scheme will be in effect for two years.
