Employment Linked Incentive Scheme –Whether A Relief Or Burden On The Employers

Background:

The Indian Union Budget 2024–25 allocated rupees two thousand billion (~23.5 billion USD) to be spent over 5 years for the Prime Minister's package of five schemes and initiatives to facilitate employment, skilling and other opportunities for the younger generation entering the workforce.

The Government subsequently issued a press release on July 23, 2024 on three employment-linked incentive packages, namely,

1. Incentive to the first-time employees: A direct benefit transfer of one-month's salary up to Rs. 15,000 (~175 USD) will be paid to the first-time employees registered with the Employees' Provident Fund Organisation ("EPFO");
2. Reimbursement of the EPF contribution: Reimbursement of the EPF contribution by employers up to Rs.3,000 (~35 USD) per month for 2 years in respect of each fresh/new hire; and