Job-Linked Incentive Schemes Not Mandatory, Only Nudge To Firms: FM Nirmala Sitharaman

New Delhi: The announcement of three schemes for employment linked incentives to provide support to employees and employers based on enrolment in the EPFO in Budget 2024-25 evoked mixed reactions.

While some experts have welcomed the move and call it as a step taken in right direction for job creation, others—including the opposition parties—have criticised the schemes for having lack of clarity. At such times, Finance Minister Nirmala Sitharaman has claimed that employment-linked incentive schemes and the internship programme announced in Budget 2024 were only a ‘nudge for the private sector’ and not a ‘compulsion’.

Reacting to criticisms alleging that by introducing such schemes the government was trying to interfere with the labour market and dictate the private sector, the Finance Minister told the Times of India that the government was not intruding into the private sector. “It is not compulsory for anybody, we are nudging people to do it. Who is intruding into the private sector?” she asked in the interview.

Finance Minister Nirmala Sitharaman while presenting Budget 2024 on Tuesday announced that the government will launch a scheme to provide internship opportunities to 1 crore youth in 500 top companies with Rs 5,000 per month as internship allowance and one-time assistance of Rs 6,000.

The companies are expected to bear the training cost and 10 percent of the internship cost from their corporate social responsibility (CSR) funds.

The “Support to Employers” scheme, according to the Budget, aims to promote additional employment across all sectors. Employers will receive reimbursement of up to Rs 3,000 per month for two years for EPF contributions for each additional employee earning up to Rs 1 lakh per month. This initiative is expected to create jobs for 1.5 million individuals.

But, how will this scheme be implemented? The Finance Minister claimed that there was no difficulty from the EPFO side for the implementation of the scheme. “It is only when we want interns to go for training, we will have to ensure companies come on board. We will have the labour ministry or ministry of corporate affairs to look into this. This is optional…”the minister reportedly said.

Earlier, former Finance Minister and Congress leader P Chidambaram had expressed his scepticism about the viability of the scheme. “It is an inspiring idea, but it does not inspire confidence that you will be able to place 290 lakh people under the ELI scheme as described,” he had stated.