The Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY) is a ₹99,446 crore central scheme incentivizing the creation of 3.5 crore formal jobs. By providing direct EPF wage bonuses to first-time employees and monthly subsidies to employers, it combats youth unemployment and accelerates economic formalization.
Prime Minister Shri Narendra Modi disburses employment incentives worth ₹2,400 crore on 19 June 2026 under the Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY).
Employment Promotion Scheme: Formerly known as the Employment Linked Incentive (ELI) Scheme, this Central Sector Scheme operates with budgetary outlay of ₹99,446 crore for the period of August 2025 to July 2027.
Targeted Job Creation: The scheme aims to incentivize the creation of over 3.5 crore jobs, including 1.92 crore first-time workforce entrants.
Dual-Incentive Mechanism: The program utilizes a two-pronged strategy: Part A provides direct financial assistance to new employees to cover friction costs, while Part B offers monthly wage subsidies to employers to offset marginal costs.
EPFO Registration Mandate: The scheme exclusively targets establishments and workers registered under the Employees’ Provident Fund Organisation (EPFO) to ensure all new jobs provide statutory social security.
Objectives of the Scheme
Formalizing the Workforce: The scheme shifts the structural balance of the labor market by pulling unorganized workers into the formal economy to enhance long-term productivity.
Overcoming Employer Hesitancy: By absorbing initial wage burdens, the government incentivizes labor-intensive industries to prioritize human labor over automation.
Universalizing Safety Nets: It brings marginalized youth under the protective umbrella of the EPF Act, 1952, granting access to provident funds, life insurance, and pension schemes.
Combating Youth Unemployment: The initiative targets the 9% unemployment rate among first-time job seekers by incentivizing the hiring of freshers.
Key Features
Part B Subsidies: The government pays employers up to ₹3,000 per month per additional employee. This subsidy lasts 2 years for general sectors and 4 years for the manufacturing sector.
Wage Slabs: Incentives follow a tiered structure: ₹1,000 for wages up to ₹10,000; ₹2,000 for ₹10,001–₹20,000; and ₹3,000 for ₹20,001–₹1,00,000.
Part A Direct Benefit: First-time employees earning up to ₹1 lakh per month receive a one-month EPF wage bonus (capped at ₹15,000).
Phased Disbursement: Payments occur via Direct Benefit Transfer (DBT) in two installments: the first after 6 months of service and the second after 12 months plus a mandatory financial literacy course.
Additionality Thresholds: Firms with fewer than 50 employees must hire at least 2 additional workers, while firms with 50 or more must hire at least 5 additional workers to qualify.
Digital Monitoring: The scheme utilizes the Aadhaar Bridge Payment System (ABPS) for employees and Face Authentication Technology (FAT) via the UMANG app for compliance.
Boosting Manufacturing: The 4-year subsidy acts as a demand-side intervention for the National Manufacturing Mission.
Behavioral Change: The 6-month continuous employment rule reduces attrition rates and fosters stable employer-employee relationships.
On-the-Job Skill Formation: Extended retention periods ensure workers receive essential training, improving their human capital value.
Inclusive Growth: Locking the second incentive installment into specific accounts cultivates financial discipline among low-income youth.
Risk of Temporary Jobs: Employers may retrench workers immediately after the 2-year subsidy expires, creating artificial short-term statistics.
Exclusion of Unorganized Sector: The strict EPFO requirement excludes millions of informal and gig workers registered on the eShram portal.
Skill Mismatch: A foundational skill deficit makes it difficult to reach the 1.92 crore first-timer target organically.
Budgetary Underutilization: Operational delays led to the surrender of ₹6,799 crore in FY25 and a reduction of the FY26 estimate from ₹32,646 crore to ₹12,688 crore.
Skill Development Integration: Link PM-VBRY with PMKVY 4.0 to ensure employees receive National Skills Qualification Framework (NSQF) certification.
MSME Participation: Deploy State Cross-Functional Teams to simplify registration for small businesses in labor-intensive hubs.
Labour Market Reforms: Ensure adherence to the four Labour Codes to prevent the exploitation of freshers.
Robust Monitoring: Execute third-party evaluations and utilize NCS 2.0 AI analytics to track actual retention and prevent "ghost" beneficiaries.
The PM-VBRY acts as a transformative macroeconomic tool, utilizing employer wage subsidies and EPFO-linked youth retention incentives to formalize the labor market and generate inclusive employment.
Source: NEWSONAIR
|
PRACTICE QUESTION Q. "Financial incentives alone cannot sustain long-term employment generation without robust human capital formation." Discuss. 150 words |
PM-VBRY (Pradhan Mantri Viksit Bharat Rozgar Yojana) is a Employment Linked Incentive (ELI) scheme launched to incentivize job creation and formalization. It provides direct financial subsidies to both employees and employers, with a total outlay of ₹99,446 crore, targeting the creation of over 3.5 crore jobs.
The scheme has two distinct beneficiary groups:
It promotes formalization by linking all incentives directly to EPFO registration and UAN generation, ensuring that new workers are immediately integrated into the social security net (Provident Fund) rather than remaining in the unorganized sector.
The scheme acts as the "bridge" to a developed India by aggressively converting the youth demographic dividend into a tax-paying, socially secured workforce, which is essential for sustaining the high economic growth rates required to reach the Viksit Bharat 2047 goal.
© 2026 iasgyan. All right reserved
