Budget 2024: Employment Sector Highlights

The theme for the Budget 2024 (“Budget”) displays the Government’s commitment to prioritise employment generation and skill development with a specific focus on the women, first-timers and the manufacturing sector. Pursuant to the Budget, the government will formulate an economic policy framework to set the scope of the next generation of reforms for facilitating employment opportunities and sustaining high growth. The Prime Minister’s package, comprising of 5 (Five) schemes*, has been announced to facilitate employment, skilling and other opportunities.

A. 3 Schemes for Employment Linked Incentive

The government will implement 3 (Three) employment-linked incentive schemes based on enrolment in the Employees' Provident Fund Organisation (“EPFO”) which have been enumerated below:

1. Scheme A (First Timers)



Applicants with a salary less than INR 1,00,000 (Indian Rupees One Lakh) per month will be eligible under this scheme. Further, employees availing the benefits of this scheme shall have to undergo a compulsory online financial literacy course before claiming the second instalment. If the employment of the first timer ends within 12 (Twelve) months of recruitment, employers shall have to refund the subsidy.

2. Scheme B (Job creation in Manufacturing)



Applicable to the substantial hiring of first-time employees, this scheme will incentivize the manufacturing sector. All employers who are corporate entities and non-corporate entities with a 3 (three) year track record of EPFO contribution will be qualified to claim the benefits of this scheme. Further, the employers shall be required to hire at least 50 (Fifty) or 25% (Twenty-Five per cent) of the baseline of the previous year’s number of EPFO employees, whichever is lower and thereafter maintain the threshold level of enhanced employment throughout, failing which subsidy benefit shall stop.

Employees working directly with the entity paying salary/wage (i.e. in-sourced employee) of up to INR 1,00,000 (Indian Rupees One Lakh) per month will be eligible under this scheme, subject to contribution to EPFO. For employees with wages/salary greater than INR 25,000 (Indian Rupees Twenty-Five Thousand) per month, the incentive will be calculated at INR 25,000 (Indian Rupees Twenty-Five Thousand) per month. If the employment of the first timer ends within 12 (Twelve) months of recruitment, employers will be required to refund the subsidy. This subsidy will be in addition to the benefits under Scheme A.

3. Scheme C (Support to Employers)



Under this scheme, the government will reimburse the EPFO employers from all sectors up to INR 3,000 (Indian Rupees Three Thousand) per month for 2 (two) years towards their EPFO contribution for each additional employee hired in the previous year.

This scheme will apply to employers who increase the employment above the baseline (previous year’s number of EPFO employees) by at least 2 (Two) employees (for those with less than 50 employees) or 5 (Five) employees (for those with 50 or more employees) provided that the employers sustain the higher level, and the salary of such employees does not exceed INR 1,00,000 (Indian Rupees One Lakh) per month. New employees under this scheme need not be new entrants to EPFO.

Further, if the employer creates more than 1000 (One Thousand) jobs, the reimbursement will be done quarterly for the previous quarter. This scheme will be in addition to the benefits under Scheme A and shall not apply to the employees covered under Scheme B.

B. Internship in Top 500 Companies (in 2 phases)

The government has announced comprehensive scheme for providing internship opportunities in the top 500 (Five Hundred) companies (subject to their voluntary participation) to approximately 1 (One) crore youth in 5 (Five) years in 2 (two) phases. This scheme will apply to the youth aged between 21 (Twenty-One) and 24 (Twenty-Four), not employed and engaged in full-time education. The Government shall bear a cost of INR 54,000 (Indian Rupees Fifty-Four Thousand) towards their monthly allowance and additional INR 6,000 (Indian Rupees Six Thousand) for incidentals. Companies will be expected to bear the training cost and 10% (Ten per cent) of the internship cost from their Corporate Social Responsibility funds.

Further, this scheme will target candidates with lower employability conditions and candidates having qualifications from IIT, IIM, IISER, etc. shall be ineligible to avail the benefits of this scheme. Furthermore, if any member of the family of the candidate is assessed to Income Tax or any member of the family is a government employee, etc. such candidate shall also be ineligible to avail the benefits of this scheme.

In addition to the schemes enumerated hereinabove, the government has also proposed to increase the expenditure by employers towards NPS from 10% (Ten per cent) to 14% (Fourteen per cent) of the employee’s salary. To facilitate higher participation of women in the workforce the government has proposed setting up of working women hostels in collaboration with industry and establishing creches. Further, the government will provide financial support for loans up to INR 10,00,000 (Indian Rupees Ten Lakh) for higher education in domestic institutions. The changes proposed in the Budget for the employment sector are aligned with the broader goals of boosting job creation and innovation across various sectors.

*Please note that the aforementioned proposed schemes may be subject to modification during the process of approval.*