Cabinet Approves Employment Linked Incentive (ELI) Scheme

Relevance: GS III Economics

The Union Budget 2024-25 started the Employment Linked Incentive (ELI) Scheme. This is a deliberate move by the Ministry of Labour and Employment to meet India’s growing need for more jobs, more formalized labor, and more social security. The scheme, which is also a direct way to provide financial support to first-time employees and employers that create jobs, is part of the government’s more extensive plan to stimulate the economy, improve the employability of the youth and energize the manufacturing sector.

Seven-Point Strategy to Mobilise Private Capital for Inclusive and Sustainable Growth

• To fund industry and infrastructure, expand the capital markets and fortify the banking system.
• Implementing open bidding procedures, creating independent regulators, and enhancing ease of doing business are examples of institutional reforms that can be used to address perceived risk.
• Increase the size of investment prospects by creating a pipeline of well-planned, de-risked, and investment-ready projects.
• Increase the scale of blended finance by using novel mechanisms such as impact investment instruments and sovereign green bonds, as well as public and concessional financing to reduce the risk of private investment.
• Multilateral development banks and development finance organizations play an enabling role.
• International credit rating methodologies have evolved to take into account developing economies’ and emerging markets’ long-term resilience.
• releasing funds to help Micro, Small, and Medium-Sized Businesses (MSMEs) at the grassroots level.

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The Role of Private Capital in Advancing Sustainable Development Goals (SDGs)

• Generating demand, increasing productivity, encouraging innovation, and unlocking capital.
• According to UNCTAD, there is a US$2.5 trillion yearly investment deficit in vital areas including health, education, and climate change.
• Providing underprivileged populations, such as rural areas and women-led MSMEs, with access to financing.

Mains:

Question: “The Employment Linked Incentive (ELI) Scheme reflects a shift from jobless growth to employment-intensive development.” Examine this statement in the context of India’s labour market challenges and demographic dividend.

MCQs 

Question: Consider the following statements regarding the Employment Linked Incentive (ELI) Scheme:

1. It aims to provide direct financial incentives only to employers creating jobs.
2. It is implemented by the Ministry of Labour and Employment.
3. One of its objectives is to formalize the labour market and expand social security coverage.

Which of the statements given above is/are correct?

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3

Answer: B

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MCQs PYQs

Question: Consider the following statements with reference to India : (2023) 

1. According to the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the ‘medium enterprises’ are those with investments in plant and machinery between `15 crore and `25 crore. 
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector. 

Which of the statements given above is/are correct? 

(a) 1 only 

(b) 2 only 

(c) Both 1 and 2 

(d) Neither 1 nor 2 

Answer: (b)

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