Incentive for employment creation

INDIA NEEDS TO GENERATE AT LEAST 8 MILLION JOBS EVERY YEAR OVER THE NEXT DECADE TO BECOME A DEVELOPED NATION BY 2047

- Dhurjati Mukherjee

The Cabinet's decision to roll out the Employment Linked Incentive scheme with an outlay of over ₹99,000 crore to create 3.5 crore jobs over the next two years, to be run by EPFO from this August is welcome. Job creation is critical problem given that the workforce is increasing with every passing year in a country with a massive population.

Delving into the scheme, it needs to be stated that its focus is on the formal sector which, no doubt, needs attention. The decision to pay one month’s wage of ₹15,000 in two installments is fine but the limit prescribed i.e. up to a salary ceiling of ₹1 lakh should be reconsidered. It’s very much on the higher side and should have instead been a maximum of ₹50,000. Firms participating in the scheme will get a cash incentive of ₹3000 for each additional employee hired for two years. However, this should have been raised as it would help in garnering more employment.

Such an incentive scheme is necessary for the informal sector where conditions of workers and the meager salary they receive need urgent attention. It would have been better if the government had simultaneously announced some scheme for this sector as it makes a valuable contribution to the country’s economy and absorbs a large section of workforce.