The government is planning to reduce the allocation for the three Employment Linked Incentive (ELI) schemes by 30 per cent for the current financial year, according to data provided by the Union labour ministry to a parliamentary panel.

The department-related standing committee on labour, in its report on demands for grants for the labour ministry for 2024-25, had questioned the ministry’s intent to reduce the allocation for the schemes announced by finance minister Nirmala Sitharaman in the budget for 2024-25 to address job crisis.

The committee, headed by BJP leader Basavaraj Bommai, had tabled the report in Parliament on December 16. The report cited data provided by the labour ministry on yearly estimated expenditure on the ELI schemes. According to the data, the government plans to spend around ₹6,800 crore in 2024-25 on ELI schemes against the finance ministry’s allocation of ₹10,000 crore. The committee pointed to the mismatch between the budget allocation and the ministry’s estimate.

The labour ministry on November 19 informed the committee that the schemes had been approved by the expenditure finance committee and the cabinet note had been submitted for approval. The total budgetary allocation for the schemes in the next six-and-a-half years would be ₹1.07 lakh crore, it added.

“This year because of this new ELI scheme we have been given a BE (Budgetary Estimate) of ₹10,000 crore. We have a limited amount of time this year. Therefore, in RE (Revised Estimate) we have requested a cut on that amount and it will be about ₹6,799 crore…. These schemes are awaiting the cabinet approval and we hope to start expenditure under this scheme by next month,” the labour ministry told the House panel.

Under the first ELI scheme, the government plans to provide one month’s wage subject to a maximum ₹15,000 to first-time employees in all formal sectors with less than ₹1 lakh salary per month. The subsidy is expected to assist employers in hiring first-timers.

The second scheme offers a four-year incentive to employers who hire more than 50 youths or 25 per cent of their baseline workers’ strength, whichever is lower. The incentive is 24 per cent of the salary for the first two years, followed by 16 per cent in the third year and 8 per cent in the fourth.

The third scheme is about incentives to employers who add to their baseline workforce — by two if they have less than 50 employees and by five if they have more than 50.

For two years, the government will reimburse the employer’s contribution to the Employees’ Provident Fund Organisation — by up to ₹3,000 a month — for the additional employees hired the previous year.