The Indian government has set a target to create over 35 million jobs within two years, including 19.2 million first-time entrants into the workforce. The central government program, named Pradhan Mantri Viksit Bharat Rozgar Yojana (PMVBRY), is designed to stimulate formal employment by providing financial incentives to both employers and employees.
This scheme provides payments to initial employees hired for positions under the jurisdiction of the Employees’ Provident Fund Organisation (EPFO). Furthermore, the program rewards companies that increase their staff and retain new workers.
It should be noted that these targets are governmental plans, not independent assessments of expected job creation.
In India's employment structure, agriculture remains the largest employer, providing work for 43 percent of the workforce. Industry accounts for 12.1 percent, construction for 12 percent, trade, hospitality, and restaurants for 12.9 percent, transport, storage, and communications for 5.8 percent, and other services for 13.1 percent. Mining and quarrying make up 0.3 percent, while electricity, water supply, and related services account for 0.7 percent.
A study titled 'Looking Through Employment Elasticities' showed that in most of the 55 organized manufacturing sectors studied since the mid-2000s, employment elasticity was above 0.5. Employment elasticity measures the relationship between production growth and employment growth. However, the same study found that over 40 percent of new employment created between 2008 and 2017–18 was contract employment. It is important to emphasize that the results apply only to organized manufacturing and cannot be automatically applied to the entire sector.
Specific compliance criteria are set for employers. Workers earning less than 10,000 rupees receive 10 percent of their salary, up to a maximum of 1,000 rupees. For those earning between 10,000 and 20,000 rupees, the amount is 2,000 rupees. For incomes exceeding 20,000 rupees, the incentive reaches 3,000 rupees, provided the gross wage cap is observed.
Incentive payments are made as semi-annual lump sums after completing the relevant six months of work and submitting an electronic application with reporting. The employee must remain with the same employer for at least six months, provided contributions are received during this period. Employers are also required to maintain a minimum threshold of net additional hiring. Companies with a base staff of less than 50 people must hire at least two additional employees, while those with a base staff of 50 or more must add at least five. Incentives are not accrued for months when the corresponding threshold has not been met.
