FM Nirmala Sitharaman Announces New Employment-Linked Incentive Schemes For New Budget

News Mania Desk/Agnibeena Ghosh/23rd July 2024

In a move aimed at boosting job creation and supporting the formal sector, Finance Minister Nirmala Sitharaman introduced three new employment-linked incentive schemes in the Union Budget for 2024-25. These initiatives, part of the Prime Minister’s Budget package, are designed to promote employment in manufacturing and other key sectors of the economy.

The announced schemes are primarily based on enrollment with the Employees Provident Fund Organisation (EPFO) and target various aspects of workforce development, including supporting first-time job seekers and providing incentives for both employees and employers. Sitharaman detailed the following three schemes in her budget address:

Scheme A: First-Time Employment Incentive

Under this scheme, first-time employees entering the formal sector will receive a financial boost. The government will provide a benefit equivalent to one month’s wage, distributed in three installments, to those registered with the EPFO. This support will be up to Rs 15,000, with an eligibility cap set at Rs 1 lakh per month. The scheme is projected to impact around 21 million young workers, offering them crucial financial support as they start their careers.

Scheme B: Manufacturing Sector Job Creation

This scheme is designed to stimulate job creation in the manufacturing sector by offering incentives linked to the hiring of first-time employees. Employers who bring new workers into the fold will receive financial benefits related to EPFO contributions for the first four years of their employment. The incentives will be distributed directly to both employees and employers. This initiative aims to create job opportunities for approximately 3 million young individuals and provide substantial support to businesses in the manufacturing sector.

Scheme C: Employer Support Program

The third scheme focuses on supporting employers across all sectors who add to their workforce. For every additional employee hired with a monthly salary up to Rs 1 lakh, the government will reimburse up to Rs 3,000 per month for two years towards the EPFO contribution. This initiative is expected to encourage the creation of around 5 million new jobs by easing the financial burden on employers and promoting workforce expansion.

These schemes reflect the government’s commitment to addressing unemployment and supporting the formal job market by incentivizing both hiring and employment. By targeting first-time employees and providing financial relief to employers, the initiatives are designed to stimulate job growth and enhance the overall economic stability.

As the budget moves forward, the effectiveness of these schemes in achieving their objectives will be closely monitored. The focus on job creation in critical sectors like manufacturing, alongside support for new entrants into the job market, represents a strategic approach to strengthening India’s employment landscape and fostering a more robust economic environment.