NEW DELHI, July 1: India’s federal cabinet on Tuesday approved a 1 trillion rupee ($11.7 billion) employment-linked incentive (ELI) scheme aimed at creating nearly 35 million jobs over the next two years.

The initiative will provide financial support to both employers and employees. First-time employees will receive a one-time payment equivalent to one month’s wages, capped at 15,000 rupees ($175). Meanwhile, employers will be eligible for subsidies of up to 3,000 rupees per month for two years for each new hire retained for at least six months.

According to the government, the manufacturing sector will benefit from an extended subsidy period of an additional two years. The scheme covers jobs generated between August 2025 and July 2027, with an estimated 19.2 million beneficiaries entering the workforce for the first time.

The ELI scheme was initially announced by Prime Minister Narendra Modi during the 2024 federal budget as part of a larger employment and skills development package targeting around 41 million young people. The total package, spread over five years, is valued at 2 trillion rupees and was unveiled following a decline in Modi’s party’s parliamentary seats during the national elections.

Despite India’s robust economic growth — averaging more than 8% annually over the past four years — unemployment remains a pressing concern in Asia’s third-largest economy. The national jobless rate has stayed above 5%, and nearly 45% of workers are still employed in the agriculture sector.

Youth unemployment continues to be a major issue, especially in urban areas. In May, the unemployment rate among urban youth aged 15 to 29 rose to 17.9%, up from 17.2% in April. In rural areas, the rate increased to 13.7% from 12.3% during the same period.