By Dr. Gyan Pathak
The flagship job creation initiative, considered India’s only substantial programme for employment, announced in the Union Budget 2024-25, has deviated from its planned schedule. Originally set to commence on August 1, its launch is now postponed to January 2025 due to incomplete programme details. A significant factor contributing to this delay, as stated by the Union Ministry of Labour and Employment to the Parliamentary Committee, is the pending approval from the Union Cabinet.
Consequently, the Union Ministry of Labour and Employment is facing challenges in effectively rolling out this programme within the current fiscal year and has hence proposed to the Union Ministry of Finance a nearly one-third reduction in its budget allocation.
“Given the limited timeframe this year, we have sought a budget cut in the Revised Estimate,” communicated the Union Ministry of Labour and Employment to the Parliamentary Committee on November 19, as noted in the report from the panel.
This flagship job creation programme comprises three Employment Linked Incentive (ELI) Schemes, for which the Union Budget initially allocated Rs 10,000 crore. However, the Union Ministry of Labour and Employment is now requesting a reduction in the budget for the ELI Schemes to Rs 6,852 crore for the current fiscal year, as mentioned in response to a parliamentary inquiry.
Aside from the limited time remaining in the current fiscal year, which concludes on March 31, 2025, the Union Ministry of Labour and Employment has identified eligibility criteria as significant obstacles to executing the scheme within the designated timeline.
The three ELI schemes are still awaiting Union Cabinet approval and are experiencing substantial delays, with only one quarter left before the fiscal year concludes.
Nonetheless, the Union Ministry of Labour and Employment informed the House panel, “The Cabinet note has been submitted, and we anticipate commencing soon. The total budget for this scheme over the next six-and-a-half years will be Rs 1.07 trillion. This year, Rs 10,000 crore has been allocated, and we expect to utilize over Rs 6,000 crore.”
In terms of financial and physical targets, the Union Ministry of Labour projects expenditures of Rs 3,576 crore for Scheme A, Rs 1,534 crore for Scheme B, and Rs 1,651 crore for Scheme C. The ministry anticipates that 93 lakh workers will benefit from the three schemes during the current fiscal year.
Scheme A targets first-time job seekers, Scheme B focuses on fostering decent job creation within the manufacturing sector, and Scheme C incentivizes employers across all industries to create additional employment beyond the specified threshold.
Subsidies will be provided to both employers and employees via the Employment Provident Fund Organisation (EPFO). It was asserted in the Union Budget 2024-25 that this programme aims to create 8 million decent jobs and skill 10 million youth over the next five years.
As per the Union government’s proposal, the intended expenditures for ELI Scheme A from FY25 to FY28 are Rs 22,333 crore, for Scheme B from FY25 to FY31 are Rs 48,326 crore, and for Scheme C from FY25 to FY31 are Rs 36,040 crore.
However, since the announcement of the scheme, progress has been markedly unsatisfactory, despite more than two dozen meetings involving officials from the Union Ministry of Labour and Employment, other ministries, state representatives, and labor organizations. Employers have been particularly reluctant to engage with the schemes.
There have been numerous obstacles. The revamping of EPFO necessary for implementing the ELI schemes has been sluggish. The Parliamentary panel has also noted that EPFO is still in the process of developing dedicated IT infrastructure in collaboration with the Union Ministry for Electronics and Information Technology (MeitY) for the scheme, which includes creating software systems and applications for the efficient registration and disbursement of incentives and subsidies. The parliamentary panel has expressed a desire for this process to be completed promptly and within a fixed timeline.
Another significant challenge has been the payments system framework. Although the Centre has directed all ministries and departments to ensure that subsidies and incentives are disbursed to beneficiaries via the Aadhaar Payment Bridge, progress at the EPFO level has been very slow.
EPFO has been instructed to ensure that employers finish the initial phase of Universal Account Number (UAN) activation using Aadhaar-based OTP by November 30, 2024. This phase starts with the most recent hires within the current fiscal year 2024-25. The second phase will incorporate biometric authentication through face recognition technology, after which employers must complete the process for all their employees.
However, the November 30 deadline was not met, leading to an extension until December 4, with a new deadline set for December 15. Alongside the UAN activation deadline extension, the government has also postponed the date for linking Aadhaar to bank accounts. On December 11, Union labour secretary Ms. Sumita Dawra encouraged hesitant companies at the CII Global Economic Forum to utilize the ELI scheme to enhance their competitiveness.
A primary reason for the delays in implementing the scheme is that the Union government has yet to announce the specifics of the ELI scheme, leading to employer apprehension. The Union Ministry of Labour and Employment has since informed the House panel that the schemes have not received Cabinet approval yet, but this may happen soon.
Officials from the Union Ministry of Labour and Employment anticipate that the details of the schemes will be finalized and ready for notification and implementation by January 2025, just a few weeks before the Union Budget 2025-26 is presented in Parliament on February 1, 2025.
This situation poses serious concerns for the workforce in India, as over 90% of workers are engaged in informal jobs, whether in the formal sector or not. They often find themselves in low-quality, low-wage roles without social security. Many have precarious employment situations, and about 20% of employed individuals, according to PLFS government data, are not in paid work. (IPA Service)
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