As India becomes the most populous country in the world, surpassing China, several issues and challenges stare at it, especially on the issue of turning its demography (nearly half of its population is under the age of 30) into dividend and not as a disaster.

It needs to ensure that not only its economy grows at an unprecedented pace, but also that the fruits of its growth are shared by the people in the most equitable manner possible.

Herein therefore lies its critically vital, daunting task—to provide employment to the youth and the new entrants to the workforce, especially the women and the marginalised section of society.

To fully harness the unparalleled opportunity that India has been gaining due to a surge in its economy, it must meticulously identify the disparities between the demand for and supply of employment opportunities within its labour market. It is in this context that the newly launched ELI can act as a game-changer.

On July 1, 2025, the Union Cabinet approved the Employment Linked Incentive (ELI) scheme that was announced in the Union Budget 2024-25 with an outlay of Rs 99,446 crore, aimed at creating over 3.5 crore jobs. The initiative aims at first-time workers, with a focus on the manufacturing sector, providing new EPFO-registered employees (making up to Rs 1 lakh monthly) with a one-month pay subsidy (up to Rs 15,000) through Aadhaar-linked Direct Benefit Transfer, contingent upon completion of a necessary financial literacy training for the second installment.

Employers obtain Rs 1,000-Rs 3,000 monthly for each new employee for a duration of two years, which is extendable to four years for manufacturing companies, hence diminishing hiring expenses. The requirement for EPFO registration formalises work, hence improving accessibility to social security benefits such as savings and healthcare.

Executed via EPFO’s digital platform, it guarantees efficient disbursements and accountability, mandating companies to retain positions for a minimum of six months. The ELI scheme promotes inclusive growth, skill enhancement, and economic advancement. By prioritising first-time employees, it directly tackles the difficulties encountered by young job seekers, especially those new to the workforce with limited experience.

The ELI scheme of 2025 is different from PLI scheme of 2021 as it not only supports job creation by incentivising the employers but promotes well-equipped future-ready workforce. While PLI 2021 focused on creating new formal jobs, it lacked focus on skill-based development of the workforce., ELI 2025 focuses on skilling the workforce, inclusion of gig jobs and bettering institution-industry coordination. It also integrates digital monitoring tools and links employment growth with technology adoption, making it more responsive to India’s evolving labour market needs and demographic........

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