Employment-Linked Schemes to Prevent Fund Misuse

The government is revising its proposed employment-linked incentive schemes to prevent misuse and fund diversion, ensuring that only genuine employees and employers benefit, sources said.

Key Developments

• The Cabinet has returned the Labour Ministry’s proposal, seeking refinements in the scheme design.
• The Ministry of Labour and Employment is restructuring the scheme to ensure real employment generation.
• Concerns arise from past misuse under the Atmanirbhar Bharat Rojgar Yojana (ABRY), where fake firms were created to access incentives.

Proposed Safeguards

• Aadhaar Linking: While Aadhaar-based verification is included, the government is unsure if this alone can prevent fraud.
• Mandatory Audits: Exploring periodic audits for all beneficiary companies to enhance transparency.
• EPFO Strengthening: Plans are underway to boost EPFO’s capacity to manage additional payrolls under the schemes.

Details of the Employment-Linked Incentive Schemes

• Budget Allocation: ₹1.07 lakh crore earmarked for the schemes over five years.
• Job Creation Target: 29 million jobs expected under the schemes.
• Scheme A:
  • Government to reimburse one month’s wage (up to ₹15,000) in three instalments as a subsidy for new workforce entrants.
• Scheme B (Manufacturing Sector Focus):
  • Wage reimbursement structure:
    • 24% in Year 1
    • 24% in Year 2
    • 16% in Year 3
    • 8% in Year 4
  • Employers must hire 50% or 25% of their baseline employee strength under EPFO and retain them for at least 12 months to qualify.

Future Outlook

• The government aims to finalize the revised structure soon to ensure effective implementation.
• Additional monitoring mechanisms may be introduced to prevent fraud and enhance accountability.

The revised framework seeks to strike a balance between employment promotion and financial prudence, ensuring that incentives reach genuine beneficiaries without fund leakages.

TET