What happens if after 2-3 years the project has failed to reach its criteria of number of jobs? Are their penalties imposed? How do you deal with this issue?

That depends on the reasons for not achieving the goals. Normally, the shortfall in jobs will become clear before the project ends. In that case, corrective measures may be necessary, or – in the worst case – the project may be aborted. As the grant is disbursed based on milestones, this may mean that the payment of some of the later disbursements may vary.