1. Introduction 

The 2024 union budget presented by Finance Minister Nirmala Sitharaman on 23rd July 2024 is an employment-centric budget that has prioritized the creation of fresh employment and skill development. The budget has introduced reliefs with respect to deductions of income tax and deductions with respect to the National Pension Scheme.


 It has also announced five major schemes in the budget, along with the ancillary programmes, cover a wide array of facets of the labour and employment sector, including financial support to new employees, incentives to employers to hire more employees, skill development programmes, paid internships, education and skill development loans, revamping of courses to meet the demand of the industry, women empowerment, and labour reforms amongst others.


The Indian government has unveiled the ambitious Prime Minister’s Package, a comprehensive initiative aimed at transforming the lives of over 4 crore Indian youth. With a staggering outlay of ₹2 lakh crore, this package encompasses five key schemes designed to enhance employment prospects, foster skill development, and provide educational opportunities. For the financial year 2024-2025, a substantial budget of ₹1.48 lakh crore has been earmarked to empower the nation’s youth. Besides these five schemes, the government has also announced new programmes to empower the women workforce and to provide loans to youth for skill development and for higher education.


The key employment-related highlights of the 2024 budget are discussed below in detail:


2.    Income Tax Deduction:

a.    Standard Deduction: for salaried employees to be increased from ₹50,000/- to ₹75,000/-.

b.    Deduction on Family Pension: for pensioners to be enhanced from ₹ 15,000/- to ₹ 25,000/-.

 

3.    National Pension Scheme:

a.    The deduction of expenditure by employees towards the National Pension Scheme (“NPS”) has been enhanced from earlier 10% to 14% of the employee’s salary.

b.    Further, similar deductions up to 14% of salary from the income of employees in private sector, public sector banks and undertakings are available.

c.    Non-government employees in the new tax regime shall be allowed a deduction of an amount not exceeding 14% of the employee’s salary in place of 10%.

d.    NPS-Vatsalya, a new plan for contributions made by parents and guardians for minors, is also introduced.

 

4.    Employees’ Stock Option Plan:

  • The 2024 budget has decriminalized the non-reporting of foreign assets, including the Employees’ Stock Option Plan (“ESOP”), up to a limit of ₹ 20 lakhs.

 

5.    Employment Linked Incentives

  • It is an umbrella programme encompassing three different schemes, which will be based on enrolment in the Employees’ Provident Fund Organization (“EPFO”) and will primarily focus on youth entering the workforce for the first time. These schemes are discussed below:

5.1. Scheme A: First-Timers

This scheme is tailored to support Indian youth entering the formal workforce for the first time. The key highlights of the scheme are:

a.    Eligibility:

  • Every person entering the workforce in the formal sector for the first time and drawing a salary up to ₹ 1 lakh per month.
  • The scheme targets those who will be registered with the EPFO for the first time.

b.    Direct Benefit Transfer:

  • Eligible employees will receive a one-month wage as a direct benefit transfer, capped at ₹15,000.
  • The benefit will be disbursed in three instalments, providing financial relief during the initial months of employment.

c.    Impact and Reach:

  • Over two crore Indian youth stand to directly benefit from this initiative, enhancing their financial stability and easing their transition into the workforce.

 

5.2. Scheme B: Job Creation in the Manufacturing Sector

The government has introduced this forward-thinking approach, aiming to strengthen job creation in the manufacturing sector and empower its young workforce. The key highlights of the scheme are:

a.    Incentives for First-Time Employees and Employers:

Ø New employees entering the manufacturing workforce and their employers will receive incentives based on their EPFO contributions during the initial four years of employment.

Ø These incentives will be provided at a fixed rate, aiming to enhance financial stability for first-time workers.

b.    Projected Impact:

Ø Over 30 lakh additional youth are expected to benefit directly from this scheme, as they embark on their employment in the manufacturing sector.

Ø Simultaneously, employers are motivated to expand their workforce, creating a win-win scenario for both parties.

 

5.3. Scheme C: Support to the Employers:

This is the third scheme under the Employment Linked Incentive, which aims to stimulate employment growth across all sectors. The key highlights of the scheme are:

a.    Eligibility and Scope:

  • All additional employment within a monthly salary of ₹1 lakh falls under this scheme. This scheme will encourage employers to hire more employees, which will contribute to overall economic expansion.

 

b.    Employer Reimbursement:

  • Eligible employers will receive reimbursement of up to ₹3,000 per month on the EPFO contribution made by them for each new employee for the next two years.

c.    Projected Impact:

  • Over 50 lakh youth are expected to benefit directly from this scheme, fostering job creation and economic vitality.

 

6.    Skill Development Programme:

It is the 4th scheme under the Prime Minister’s Package for employment and skilling in collaboration with state governments and industry. The key highlights of the scheme are:

a.    Objective:

  • The scheme aims to provide specific skills to over 20 lakh youth within the next 5 years.

b. Upgradation of Educational Institutes:

  • The government plans to upgrade one thousand Industrial Training Institutes (“ITIs”) across the country. These ITIs will follow a hub-and-spoke arrangement, ensuring effective skill development outcomes.
  • The courses offered by these upgraded ITIs will undergo a comprehensive revamp to align them with industry requirements, ensuring that youth acquire relevant skills.

 

7.    Internships in the Top Companies:

This is the 5th and final scheme of the Prime Minister’s Package for employment and skill development in India. It aims to provide Indian youth with real-life exposure to the corporate world and train them to be future leaders.  

a.    Objective:

  • The scheme aims to provide valuable internship opportunities to over one crore youth within the next five years. These internships will be provided by the top 500 Indian companies, as identified by the government for this purpose.
  • Youth participating in this scheme will gain real-life work experience over a period of 12 months. However, these internship opportunities will in no way guarantee any formal employment post completion of the internship.

b.    Financial Support:

  • Interns will receive a monthly allowance of ₹5,000 during their internship tenure.
  • Additionally, a one-time assistance of ₹6,000 will be provided to support their needs.

c.    Cost of Internship:

  • The concerned companies will bear the training costs for the interns. Furthermore, 10% of the internship cost will be covered by their Corporate Social Responsibility (CSR) funds.

 

8.    Other Key Initiatives:

 

8.1. Women Empowerment

To facilitate higher participation of women in the workforce, the government will set up women’s hostels, and creches in collaboration with the industry.  In addition, the government will collaborate with industry to organize women-specific skill development programmes and will promote market access to women’s self-help groups.

8.2. Skilling Loans:

The government will revise the Model Skill Loan Scheme to facilitate skill loans for up to ₹7.5 lakh with the backing from any government-promoted fund. This programme will help over 25000 students achieve the desired skills every year.


9.    Labour Reforms:

The government has announced that it will provide a wide array of services to labourer, which primarily deals with their employment and skilling. Some of the promised reforms include:

  • A comprehensive integration of the e-shram portal with other portals to facilitate a one-stop solution.
  • The establishment of open architecture databases for the rapidly changing labour market, skill requirements, and available job roles, as well as a mechanism to connect job aspirants with potential employers.
  • Shram Suvidha and Samadhan portals will be revamped to enhance ease of compliance for industry and trade.