Budget 2024: New ELI scheme is focused on formalisation of labour, says Jayant Sinha

Union Budget: The new Employment Linked Incentive (ELI) scheme is more focused on formalisation of labour, said Jayant Sinha, former Minister of State for Finance.

Addressing the Business Today Budget Round Table 2024, Sinha said that this scheme is designed to upskill fresh college passouts and make them employable in alignment with the current job market needs. As the scheme is to be realised through EPFO registration, it talks more about formalisation of the labour which is as important as creating new jobs, he added.

However, the matter of concern, as raised by many, is whether facilitating such internships will lead to actual employment generation.

On this note, InfoEdge’s founder Sanjeev Bikhchandani said that any skill is developed the best at work and not in classrooms. “Repeated practice makes an employee perfect at the skills needed. During internships candidates learn closely by simply observing their seniors. So, this can be a good opportunity for the interns to get the experience.”

However, Rajiv Memani, chairman and CEO of EY India and CII President Designate 2024-25 expressed concerns over the fate of the interns after the period of 12 months when the internship will come to an end. Giving a rough estimate, he said that the policy is aimed to place 1 crore freshers across 500 top companies, which means each of these companies will have to accommodate about 4,000 interns at a time, on an average. Memani asked, “Do these companies have the bandwidth to accommodate so many interns? And, even if they do, what will happen to their employment status at the end of 12th month of this tenure?”

He said that the idea at the end of the day should be to employ these people. Though the scheme looks lucrative, it requires to be executed well, otherwise it will put a big question mark on the future of the candidates, he added.
 Commenting on this, Bikhchandani added, “Perhaps 5 out of some employees will end up acquiring the required skill but those will also be a good catch for a company as they would learn in that very business environment.”

Chiming in, Sinha said that majority of the government schemes evolve since the announcement in accordance with the changing market needs. If such need is felt, the government will likely rework on the ELI scheme as well. 
“But these incentives should ideally work because the government is trying to solve the mismatch between the current employable workforce and the current skill needs. There are too few jobs for too many people seeking those. In addition, we also have a backlog of pass-outs of the previous years. So to identify the employable bunch is crucial and that is what this ELI scheme is aimed at,” Sinha concluded.