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The government has announced a direct cash transfer of one month’s wage, up to a maximum of Rs 15,000, to all those newly entering the workforce in all formal sectors. The amount will be disbursed in three instalments.
In her 2024-25 Union Budget speech, Finance Minister Nirmala Sitharaman said that the eligibility limit will be a salary of Rs 1 lakh per month and that the scheme was expected to benefit 21 million youth.
Further, a scheme for providing internship opportunities in 500 top companies to 10 million youth in five years will also be launched. Under this, an internship allowance of Rs 5,000 per month, along with a one-time assistance of Rs 6,000 will be provided. The minister allocated Rs 2,000 crore for the scheme.
In announcing these employment-linked incentives, it seems like the government has taken a leaf out of Congress’ Nyay Yojana and Nyay Patra proposed in its 2019 and 2024 general election manifestoes respectively.
During the 2024 election, Congress had promised a Mahalakshmi scheme to provide Rs 1 lakh per year to every poor Indian family as an unconditional cash transfer.
But what the 2024-25 budget speech suggested was that, on an average, every company will have to take 4,000 interns in one year, an expectation that doesn't seem viable.
Unemployment and creation of quality jobs had emerged as one of the key issues in the Lok Sabha national elections.
To address this, the government has allocated Rs 10,000 crore towards ‘New Employment Generation’ scheme, which, among the above-mentioned measures, also include other employment-linked incentives.
This scheme will incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees. An incentive will be provided at specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first four years of employment.
The scheme is expected to benefit 3 million youth entering employment and their employers, said Sitharaman.
This will cover additional employment in all sectors. All additional employment within a salary of Rs 1 lakh per month will be counted. The government will reimburse to employers up to Rs 3,000 per month for two years towards their EPFO contribution for each additional employee. The scheme is expected to incentivise additional employment of 5 million persons.
While through these schemes, the government wants to shift a large chunk of the workforce from the informal to the formal sector, however, these are majorly supply-side measures, instead of being demand driven.
“EPFO is not demand driven. The budget speech said that workers will get benefit but how will that happen when it is the discretion of the employer to hire or not,” said Gurpreet Singh, associate professor, Jindal School of Government and public policy, OP Jindal Global University.
Calling the schemes an “ad hoc arrangement”, Singh, who was earlier associated with Centre for Budget and Governance Accountability (CBGA), said, “The announcements are majorly one-time payments. An employer would not look at one time support from the government but rather will see how the government is continuously supporting. So, this is not going to change much.”