For the great Indian middle-class, it was hard to ignore the recently announced Union Budget on a weekend. It’s been almost 48 hours since Finance Minister Nirmala Sitharaman announced the budget and its frenzied news coverage, which the middle-class Indians somehow processed because of the tax-rebates in their weekend slumber, has now precipitated.
The budget’s nitty gritties are now open for detailed discussions.
In the current fiscal, the Union Ministry of Labour and Employment has been allocated Rs 32,646 crore, which is nearly three times more than its allocation for the year 2023-24.
The actual budget for the year 2023-24 was Rs 11,385.62 crore.
In contrast, the estimated budget for 2024-25 was increased to Rs 22,531.47 crore but since the schemes were not launched, the revised budget had to be reduced to Rs 18,307.22 crore.
Now, once again, to tackle the employment woes, the budget for the labour ministry has seen an unprecedented increase.
This budget also provides Rs 20,000 crore for a new employment generation scheme. In the previous year's budget, Rs 10,000 crore had been allocated for this purpose, but this was later revised down to Rs 6,799.43 crore.
In addition, the budget for skill development, labour, and employment has also been nearly doubled.
The actual budget for 2023-24 in this category was about Rs 10,729 crore, but it was increased to Rs 19,627.44 crore (estimated) in the general budget presented in July last year. However, when the revised budget was presented, it was reduced to approximately Rs 15,870 crore. Now, in the 2025-26 budget, the allocation for this category has been increased to Rs 28,717.72 crore, which is an increase of nearly 80 per cent compared to the revised budget.
In the first budget of the PM Modi-led government’s third term (2024-25), the announcement to provide Rs 15,000 to first-time jobholders, along with five employment-related schemes, had earned similar plaudits from the masses. Ever wondered what happened with those schemes?
Let’s take a look at what Finance Minister Nirmala Sitharaman stated in her budget speech on July 23, 2024. The Finance Minister stated that as part of the Prime Minister’s package, the government would implement three schemes under Employment Linked Incentives (ELI).
These schemes would be based on the Employees’ Provident Fund Organisation (EPFO) registration and would help first-time jobholders get recognition, while also supporting both the employer and the employee.
This scheme aims to provide one month’s salary to young people who are entering the formal workforce in all major sectors. Over two years, 2.1 crore youth are expected to benefit from this scheme. The eligibility limit for this scheme would be a salary of up to Rs 1 lakh per month.
Those registering with EPFO for the first time will receive one month’s salary, up to Rs 15,000, in three installments through direct benefit transfer. A total of 21 million youth are expected to benefit from this scheme.
This scheme aims to incentivise additional employment in the manufacturing sector, specifically for first-time jobholders. This scheme is expected to benefit 3 million youth and their employers.
Both employees and employers will be provided with incentive amounts regarding their EPFO contributions during the first four years of employment, based on a specified scale. If the first-time worker's services are terminated within 12 months of their appointment, the subsidy will be refunded by the employer.
This employer-focused scheme will cover additional employment in all sectors. All additional employees within a monthly salary of Rs 1 lakh will be considered. The government will reimburse Rs 3,000 per month to employers for EPFO contributions for each additional employee, for a period of two years.
This scheme is expected to incentivise additional employment for 5 million individuals.
In her budget speech, the Finance Minister also mentioned a new skill development initiative as the fourth scheme under the Prime Minister’s package. This new scheme, which will be sponsored by the Centre in collaboration with state governments and industry, will provide skill training to 2,000,000 youth over a period of five years, with an allocation of Rs 60,000 crore.
The Finance Minister also announced the fifth scheme under the Prime Minister’s package, which will provide training to 10 million youth over five years in collaboration with 500 top companies (company participation will be voluntary).
This scheme will provide a monthly training allowance of Rs 5,000 and a one-time assistance of Rs 6,000.
This year's budget document also provides details of the implementation status of the 2024-25 budget announcements. It shows that the Employment Incentive Scheme is still under consideration, with the Cabinet note being drafted by the Ministry of Labour and Employment.
In other words, the scheme has not yet received Cabinet approval, and the draft is still being prepared.
There have been several meetings between the Ministry of Labour and Employment and the Confederation of Indian Industry (CII) regarding employment generation in the manufacturing sector.