Policy Update
Tanisha Hooda
Background
The Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY) is a Central Sector Scheme of the Government of India aimed at promoting new employment, encouraging formalisation of jobs, and strengthening social security for workers. It provides incentives to both first-time employees entering the formal workforce and employers who create and sustain additional employment.
Policy Gap: India’s employment landscape continues to face challenges related to formal job creation, the transition of first-time workers into formal employment, and employer incentives for generating additional jobs. The absence of sufficiently targeted incentives to address these gaps created a need for a policy mechanism that could simultaneously encourage formal employment and support first-time workers entering the organised workforce.
With a total outlay of ₹99,446 crore, PM-VBRY aims to incentivise the creation of more than 3.5 crore jobs over a two-year period. The benefits apply to eligible jobs created between 1 August 2025 and 31 July 2027 (Ministry of Labour & Employment, 2025). The scheme is implemented by the Ministry of Labour & Employment through the Employees’ Provident Fund Organisation (EPFO).
PM-VBRY has two components. Part A focuses on first-time employees by providing incentives to youth entering the formal workforce, while Part B provides incentives to employers for generating and sustaining additional employment.
Functioning
1. Incentives for First-Time Employees: The scheme provides a one-time incentive of up to ₹15,000 to first-time employees entering formal employment. The incentive is intended to provide financial support during the initial period of formal employment and encourage continued participation in the formal workforce. The scheme also incorporates financial literacy measures for first-time workers.
To qualify, the employee must not have been a contributing EPFO member before the scheme and must join an eligible establishment during the scheme registration period. UAN authentication through Face Authentication Technology on the UMANG App is required.
2. Incentives for Employers: Employers are incentivised for creating and sustaining additional employment. The scheme determines additional employment by comparing the establishment’s workforce with a defined baseline. For eligible existing establishments, the baseline is determined based on the prescribed average employment criteria, while a baseline of 20 employees applies to new establishments. Employer incentives are available for two years, with establishments in the manufacturing sector eligible for incentives for four years, subject to the prescribed conditions.
3. Implementation and Verification: The scheme is implemented by the Ministry of Labour and Employment through EPFO, with EPF contribution records forming the basis for determining eligibility and incentives. Establishments must file the Electronic Challan-cum-Return (ECR) and make the required EPF contributions for employees to be counted under the scheme. Eligibility is also determined through criteria such as the employee’s joining date, wage level, contribution period, UAN authentication, and employment status. This EPFO-based mechanism supports the verification of eligibility and employment records under the scheme.
4. Direct Benefit Transfer and Instalment-Based Payment: The incentive for eligible first-time employees is transferred through the Direct Benefit Transfer (DBT) mechanism. The incentive is paid in two instalments, with the first instalment linked to six months of continuous employment and the second instalment linked to completion of 12 months of employment and the prescribed Financial Literacy Course. This payment structure combines financial support with continued participation in formal employment and financial awareness.
5. Digital Registration and Authentication: PM-VBRY uses a digital registration and authentication framework to facilitate enrolment and verify beneficiaries. The process relies on Universal Account Numbers (UANs), Aadhaar authentication and online registration through the EPFO system. For first-time employees, UAN authentication through Face Authentication Technology on the UMANG App is required for receiving the applicable incentive. This digital mechanism is intended to ensure that benefits are linked to verified employees and their formal employment records.
Performance
1. Employment Opportunities Supported under PM-VBRY: Since its implementation in August 2025, PM-VBRY has supported formal employment through incentives to first-time employees and employers. By June 2026, incentives under PM-VBRY had facilitated employment for more than 15 lakh beneficiaries across the country.
Table 1: Employment Opportunities Supported under PM-VBRY
| Indicator | Reported figure |
| Beneficiaries for whom employment was facilitated | 15 lakh+ |
Source: PIB, Ministry of Labour & Employment, 17 June 2026.
The reported figure indicates the number of beneficiaries for whom employment was facilitated through the scheme during its initial implementation period from August 2025 to June 2026.
2. First-Time Employees Brought into the Formal Workforce: Bringing first-time employees into formal employment is one of the key objectives of PM-VBRY. By June 2026, more than 70 lakh first-time employees had reportedly entered the formal workforce, against the scheme’s target of approximately 1.92 crore first-time entrants.
Figure 1: Progress in First-Time Employee Coverage under PM-VBRY
Source: PIB, Ministry of Labour & Employment, 19 June 2026.
The reported coverage of more than 70 lakh first-time employees is approximately 36.5% of the scheme’s target of 1.92 crore first-time entrants. This comparison reflects reported administrative coverage during the initial implementation period.
Note: The 15 lakh figure refers to beneficiaries for whom employment was facilitated, while the 70 lakh figure refers to first-time employees brought into the formal workforce; the two figures represent different reported measures.
3. Financial Disbursement under Part A and Part B: The implementation of PM-VBRY can also be assessed through the incentives disbursed to employees and employers. In March 2026, a total of ₹461 crore was disbursed, covering both components of the scheme.
Figure 2: Disbursement under Part A and Part B, March 2026
Source: PIB, Ministry of Labour & Employment, 19 June 2026.
Part A accounted for ₹247 crore of disbursement to 4.41 lakh first-time employees, while Part B accounted for ₹214 crore provided to 17,551 establishments, supporting approximately 6.46 lakh additional workers. Together, the two components resulted in ₹461 crore being disbursed in March 2026.
4. Implementation Milestones: The scheme’s implementation can further be assessed through milestones achieved by beneficiaries after entering formal employment. By June 2026, nearly 20 lakh young people had completed six months in their first jobs, while around 10 lakh beneficiaries had received incentives after completing the required milestone.
Table 2: PM-VBRY Implementation Milestones, June 2026
| Implementation milestone | Reported figure |
| First-time employees brought into formal workforce | 70 lakh+ |
| Completed six months in first jobs | 20 lakh |
| Received incentives after milestone | 10 lakh |
Source: (Press Information Bureau [PIB], 2026)
These figures highlight different implementation milestones under PM-VBRY, including entry into formal employment, completion of six months of employment, and receipt of incentives after the prescribed milestone.
Impact
1. Expansion of Formal Employment: PM-VBRY is designed to support the expansion of formal employment by bringing first-time employees into the EPFO-linked workforce. By linking incentives to formal employment and EPFO registration, the scheme can support greater formalisation of employment and access to social security benefits.
2. Financial Support for First-Time Workers: The first-time employee component provides financial support of up to ₹15,000, paid in two instalments based on continued employment. The payment structure provides financial support during the initial period of formal employment while linking subsequent payment to continued employment.
3. Incentivising Additional Employment by Employers: The employer component provides incentives of up to ₹3,000 per month per additional employee for eligible establishments. By linking the incentive to sustained employment for at least six months, the scheme is designed to encourage employers to create additional jobs rather than only short-term employment opportunities.
4. Promotion of Savings and Financial Literacy: PM-VBRY incorporates a financial literacy programme into the release of the second instalment for first-time employees. In addition, a portion of the incentive is retained in a savings instrument or deposit account for a fixed period. These provisions extend the scheme beyond immediate income support by incorporating financial awareness and savings-related measures for young workers.
5. Manufacturing and Employment-Intensive Growth: The scheme provides an extended incentive period for employers in the manufacturing sector, with benefits continuing for up to four years. This additional support is intended to encourage sustained employment generation in manufacturing and strengthen the sector’s role in creating formal jobs.
Emerging Issues
1. Complexity in Calculating Net Additional Employment: The calculation of net additional employment under Part B involves multiple stages, including establishment-level eligibility checks, identification of eligible employees and assessment of workforce additions. This may create scope for inconsistencies or calculation errors, particularly when employee additions and exits occur within the same period. To address this, EPFO can strengthen automated calculation and validation mechanisms, while employers can maintain updated employee records and conduct regular internal verification.
2. Distinguishing Additional Hires from Replacement Hires: Since the employer incentive is linked to additional employment, distinguishing genuinely additional employees from replacement hires is an important implementation issue. Frequent employee exits and new recruitments may make it difficult to determine whether an establishment has actually expanded its workforce. EPFO can therefore strengthen monthly monitoring of employee exits, new hires and employment tenure, while employers should maintain transparent recruitment and employment records and facilitate periodic verification.
3. Administrative Compliance for Establishments: Online registration, employee-level verification and other procedural requirements may increase the administrative burden associated with claiming incentives, particularly for establishments with limited administrative capacity. EPFO can reduce this burden through simplified digital guidance, standardised compliance checklists and dedicated support mechanisms, while employers can strengthen internal record-keeping and ensure timely completion of required procedures.
4. Timeliness and Predictability of Incentive Payments: The Part B incentive requires eligibility verification, identification of eligible employees and monthly calculation before payment. Delays or discrepancies at any of these stages may affect the predictability of incentive payments for establishments. EPFO can improve transparency by providing online tracking of claim status and verification stages, while employers can ensure timely submission and reconciliation of employment-related records.
5. Monitoring Employment Retention: Since employer incentives are linked to sustained employment, continued monitoring is required to determine whether employment supported under the scheme remains sustained over time. Employee exits may also affect subsequent eligibility and incentive calculations. The Ministry of Labour & Employment and EPFO can strengthen longitudinal monitoring through EPFO records and publish aggregate indicators on employment retention, while employers can maintain accurate records of employee tenure and workforce changes.
Way Forward
PM-VBRY represents an employment-linked approach to promoting formal job creation, supporting first-time employees and encouraging employers to expand their workforce. The scheme’s early implementation has recorded substantial participation of first-time employees and additional employment supported through employer incentives. By linking employment generation with EPFO registration and social-security coverage, the scheme can contribute to a broader shift towards formal and more secure employment. Its effectiveness, however, will need to be assessed continuously against its employment and formalisation objectives as implementation progresses.
Going forward, sustained attention to the quality, continuity and inclusiveness of employment will be important. Regular monitoring of employment retention, wages, sectoral participation, regional coverage and participation of different categories of workers can provide a clearer assessment of the scheme’s longer-term outcomes. The implementation framework can also be strengthened through efficient digital systems, simplified compliance procedures and timely resolution of registration or incentive-related issues. Periodic evaluation of employer participation and the extent of genuinely additional employment can further help ensure that public incentives remain closely linked to the intended employment outcomes.
Over the longer term, PM-VBRY can be aligned more closely with broader labour-market and skill-development initiatives to strengthen the transition of young workers into productive and sustainable employment. Greater coordination between the Ministry of Labour & Employment, EPFO, employers, industry bodies and skill-development institutions can support better integration of employment, skills and social-security objectives. Continued evidence-based evaluation and transparent reporting of outcomes will be important for refining the scheme during its implementation period and for strengthening its contribution to formalisation, workforce participation and an employment-oriented growth trajectory under the broader vision of Viksit Bharat@2047.
References
Employees’ Provident Fund Organisation (EPFO), 2025, Pradhan Mantri Viksit Bharat Rozgar Yojana Guidelines, Ministry of Labour & Employment, Government of India.
https://pmvbry.epfindia.gov.in/guidelines/
Ministry of Labour and Employment, 2025, Pradhan Mantri Viksit Bharat Rozgar Yojana Guidelines, Government of India.
https://www.mofpi.gov.in/sites/default/files/pradhan_mantri_viksit_bharat_rozgar_yojana_pmvbry.pdf
Employees’ Provident Fund Organisation (EPFO), 2025, Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY) Scheme, Ministry of Labour & Employment, Government of India.
https://www.epfo.gov.in/pmvbry-scheme/
Press Information Bureau (PIB), 2026, PM to disburse incentives worth around ₹2,400 crore under the Pradhan Mantri Viksit Bharat Rozgar Yojana on 19 June, Prime Minister’s Office, Government of India.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2273997®=48&lang=2
Press Information Bureau (PIB), 2026, PM Modi to Release ₹2,400 Crore Incentives Under Viksit Bharat Rozgar Yojana; Pune to Host Grand Events Across 4 Locations, PIB Mumbai, Government of India.
https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2274493®=1&lang=1
Ernst & Young (EY) India, 2025, SOP for calculating incentive under the Pradhan Mantri Viksit Bharat Rojgar Yojana (Employment Linked Incentive Scheme), EY India, 19 November 2025.
https://www.ey.com/en_in/technical/alerts-hub/2025/11/sop-for-calculation-of-incentive-under-pmvbry-employment-linked-incentive-scheme
About the Contributor:
Tanisha Hooda is a Research Intern at the Impact and Policy Research Institute (IMPRI) and a B.A. (Hons.) Economics graduate from Manav Rachna International Institute of Research and Studies (MRIIRS), Faridabad. Her research interests include competition policy, digital economy, public policy, and economic development, with a focus on analysing the socio-economic implications of emerging policy frameworks.
Acknowledgement
The author extends sincere gratitude to Tanisha and Sneha Kohli for their valuable guidance, support, and review of the Policy Update.
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organization.
Reviewed by Tanisha and Sneha Kohli
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