By Pradeep Kumar Jena
The Prime Minister launched the Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY) from the ramparts of the Red Fort as part of his 79th Independence Day speech, marking a significant push towards employment generation and economic growth. The ambitious Employment Linked Incentive (ELI) scheme, recently approved by the Union Cabinet, aims to create more than 3 crore new jobs across the country over the next two years, by July 2027. As stated by the PM, this scheme will strengthen the bridge from Swatantra Bharat to Samriddha Bharat. With a substantial financial outlay of close to ₹1 lakh crore, PM-VBRY is designed as a Central Sector Scheme, with the objective of fostering sustained and quality employment, enhancing employability, and ensuring social security across various sectors, with a focus on manufacturing.
This scheme is being rolled out following the successful implementation of the Production Linked Incentive (PLI) scheme, which was introduced to achieve excellence in domestic manufacturing. Employment generation remains a crucial policy intervention for every government to ensure the productive engagement of India’s vast labour force, as inclusive development depends on large-scale job creation. According to the Periodic Labour Force Survey (PLFS), conducted by the Ministry of Statistics and Programme Implementation (MoSPI), the overall unemployment rate in India stood at 3.2% (usual status) for the January–December 2024 period. However, unemployment among youth (aged 15–29) was considerably higher, with a rate of 15.3% during June 2025 — 13.8% in rural areas and 18.8% in urban areas. The Government of India’s well-thought-out PM-VBRY scheme will effectively address this challenge by targeting first-time employees, especially from this age group. The scheme brings optimism that this timely and strategic intervention will not only tackle youth unemployment but also strengthen India’s labour market, contributing meaningfully to the nation’s long-term economic resilience.
Main contours of PM-VBRY:
The scheme has been designed with a two-pronged approach to boost employment generation and support economic activity across sectors — with a special thrust on manufacturing.
Under the first component, the scheme targets first-time employees earning a monthly salary of ₹1 lakh or less who join the workforce between August 1, 2025, and July 31, 2027. These individuals will be eligible for an incentive equivalent to their average one-month wage, capped at ₹15,000, to be disbursed in two instalments via direct benefit transfer (DBT). The initial instalment of 50% will be payable after six months of continuous employment, and the subsequent instalment will be provided after 12 months, upon successful completion of an online financial literacy course facilitated by the Employees' Provident Fund Organisation (EPFO).
The second component of the scheme is designed to incentivise employers who create new formal jobs with gross monthly wages of up to ₹1 lakh. Employers across all sectors will be eligible to receive financial incentives for each new job created and sustained for at least six months. The incentive will range from ₹1,000 to ₹3,000 per employee per month, depending on the monthly wage level, ranging from ₹10,000 to over ₹20,000. While the benefit is applicable across all sectors for a period of two years, the manufacturing sector will receive extended support for an additional two years. Eligibility assessment, tracking of employment data, and disbursements will be managed through a customised IT system developed by EPFO, ensuring transparency and efficiency. It is expected that the scheme will provide a robust framework for generating formal employment, supporting first-timers into the labour market, and strengthening the economic fabric through strategic incentives to both employees and employers.
The benefits:
The scheme is expected to deliver significant benefits to both employees and employers, while also advancing the goal of formalising employment in India. Since the establishments must be registered with EPFO to avail the incentive, it will encourage greater formalisation of jobs by ensuring social security coverage for newly recruited employees. As a result, more young workers entering the job market will be integrated into the formal workforce, gaining long-term employment stability and access to essential benefits. The incentive to first-timers in the form of financial support will also offset the expenses they would have incurred for their immediate logistical arrangements.
Further, the innovative feature of imparting financial literacy courses to newly appointed employees under the scheme will equip beneficiaries with a better understanding of personal finance. This is expected to help them develop saving habits and manage their earnings more effectively, contributing to long-term financial well-being. The scheme will also reduce the hesitation many businesses face while hiring fresh talent, often due to lack of experience or job readiness. Incentivisation for each new job created will offset that trend.
Likewise, the scheme will also bring some relief to employers by providing financial assistance to bear the cost of additional job creation in their establishments. With more employment, there will be more productivity, eventually leading to growth in businesses and operations. Since employers are already mandated to provide social security benefits under EPFO and ESI, the incentives under PM-VBRY will serve as an added advantage, easing compliance and encouraging consistent job creation. Another major benefit is the scheme’s emphasis on stable and sustained employment, which is likely to curb high attrition rates, bringing productivity gains to employers.
Way Ahead:
Over the last two to three decades, India has witnessed a steady rise in employment. However, a large portion of the workforce remains engaged in non-agricultural informal employment, predominantly in sectors like services and construction, contradicting the Lewisian framework that predicted a shift of surplus labour from agriculture to manufacturing. The present scheme, with its built-in focus on formalisation and social security, is poised to address this long-standing imbalance. By incentivising both first-time job seekers and employers, the scheme aims to bring more workers into the formal sector while also encouraging job creation in manufacturing.
The scheme is also expected to complement the ‘National Manufacturing Mission’, announced in the Union Budget 2025–26, which focuses on infrastructure development and aims to enhance India's manufacturing capabilities, aligning seamlessly with PM-VBRY’s employment objectives. According to MoSPI, as of June 2025, India is currently executing over 1,500 major infrastructure projects, each costing ₹150 crore or more, with a combined value exceeding ₹26.85 lakh crore. These projects are set to drive massive economic activity, and the launch of PM-VBRY has come at the right opportune moment to provide the necessary employment support.
With the twin goals of inclusive employment and manufacturing growth, PM-VBRY is positioned to play a transformative role in shaping India’s workforce and boosting its economic trajectory towards a Viksit Bharat.
(The author is an IDAS officer and currently serving as Director-Labour Welfare, Ministry of Labour and Employment, Government of India.)
Views are personal, and do not represent the stance of this publication.
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