Pradhan Mantri Jan Dhan YojAna
A Scheme that ushered in Social Revolution

Dr. Ashwani Mahajan

'JAM' Trinity is the finest example of how technology can bring change in everybody's life. When Shri Narendra Modi took over as Prime Minister in May 2014, the economy was passing  through a difficult phase. On the one hand, growth had slowed down and on the other, inflation was at its peak. It was a challenge for the new government. For a country inhabited by poor masses, food security is a major concern and that requires a huge food subsidy. And if the same is attempted by way of Public Distribution System (PDS), that required a huge government expenditure. According to erstwhile Planning Commission, to transfer a food subsidy to the intended beneficiaries of one rupee, government has to spend Rs. 3.85.
Similarly, though by allowing petrol  and diesel prices to be out of administrative control, diesel subsidy had come down, but LPG subsidy continued to be a huge sum. Though, subsidies are an essential part of a social welfare State, however major concern was leakage in subsidies, which was needed to be plugged at any cost, to ensure that subsidies reach the real beneficiaries.
There was another issue, a large number of poor households (with limited financial resources) were almost untouched by the banking system. For financial inclusion, first task was to open their saving bank accounts without any deposit requirement (zero balance). That could be made possible by a push given by the government programme, namely, 'Pradhan Mantri Jan Dhan Yojana' (PMJDY).
For targeted transfer of government subsidies, the essential requirement was that all beneficiaries of government subsidies must have bank accounts. Similarly, if financial remittances are essential part of modern businesses, they are equally needed for the poor too, in order to transfer money to near and dear ones. Now since tele-density in the country improved so much, transfer of funds is just a click away for masses.
For targeted delivery of subsidies, identification of beneficiaries has been a big issue and that was helped by 'Aadhar'. Therefore, one needs to look at Jan Dhan bank accounts, Aadhar and Mobile telephony in an integrated way to understand financial inclusion and targeted delivery of subsidies. This is what one calls JAM Trinity.
PMJDY
The objectives of PMJDY are ensuring access to financial services, like availability of basic Banking. Savings bank account, access to need based credit, remittance, insurance and pension facility to the excluded sectors, that is, weaker sections and low income groups, as enshrined in the documents of the scheme. It is notable that most of these accounts have been opened by nationalised banks. Though, the provision of opening zero balance accounts existed even earlier, however, even public sector   banks never used to open such accounts. It was only after, Prime Minister Narendra Modi, took it as a campaign and instructions were issued to banks, that accounts could be opened in a big way. It is notable that on the very first day of this scheme more than 1.5 crore such accounts were opened. This is a world record.
No Longer Zero Balance
Although initially the banks were allowed to open Jan Dhan accounts with zero balance, however, they are no longer zero balance now. Nearly Rs. 81 thousand crores have been deposited in these accounts, which is encouraging. To encourage deposits and other transactions in the Jan Dhan accounts and use of Rupay Card (indigenous debit card), the scheme stipulates that Personal Accidental Insurance under PMJDY shall be payable if Rupay Card holder has performed minimum one successful financial or non financial customer induced transaction at bank branch, Bank Mitra, ATM, POS, E-commerce etc. The scheme stipulates an overdraft facility of up to Rupees 5 thousand after satisfactory operation of bank account for 6 months. Apart from earning interest on deposit, an accidental insurance cover of rupee one lakh and life       cover of Rupees 30,000 is provided under PMJDY. It is also provided that beneficiaries of government schemes will get Direct Benefit Transfer (DBT) in these accounts. Except cheque book facility, perhaps all banking facilities are available with Jan Dhan bank accounts. Even the facility of remittance of money to other bank accounts is also given in these bank accounts.
Mobile Banking
Though there is nothing new in using smart phones to conduct bank transactions, significant is the fact that PMJDY account holders can also avail the same facility of checking balance and transferring funds through a normal mobile phone. This makes banking transaction more affordable to the general public.
Direct Benefit Transfer
We understand that as a social welfare State, the government provides various types of subsidies to the general public, especially the weaker sections of the society. Earlier, food grains and other food items used to be distributed through Public Distribution System or Ration Shops. Similarly LPG gas used to be subsidised by mandating oil companies to sell LPG gas at a lower price and compensating the same by transferring equivalent amount to the oil companies. MNREGA wages also used to be distributed through contractors. Old age pensions and other social welfare benefits were also distributed through government network or agents. Most of the benefits never used to reach the beneficiaries fully.  Opening of Jan Dhan accounts has resolved this problem. For sending direct benefit transfer to the real beneficiaries without leakages, the government needs two things. One, a bank account where the government could send the benefit and two, beneficiaries are so identified that there is no duplicity in benefit transfer.
After opening a large number of zero-balance Jan Dhan accounts, another requirement was that of identification of beneficiaries. Previous UPA government had introduced 'Aadhar', that is, provision of a 12 digit Unique Identification Number, to all residents of the country with figure prints and iris scan. However, the same could not be given legal status as Aadhar Bill could not be passed in the Parliament.
In the Budget Session of 2016, Parliament passed 'Aadhar' (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, as a money bill. Safe passage of 'Aadhar' (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill was considered as a 'game changer'. Provision was made to give unique identity to all residents (including children) by assigning a 12 digit number on 'Aadhar Card'. The government considers that Aadhar is a good proposition, as with the help of Unique Identity (UID) of residents, financial subsidies and other public services could be targeted more efficiently. This was also felt that the apprehensions expressed about the assault on privacy could be taken care of by making appropriate statutory provisions.  However, we must also understand that though 'Aadhar' Bill 2010 and 'Aadhar' (Targeted Delivery of Financial and Other Subsidies, Benefits and Services)  Bill 2016 are seemingly no different from each other, there are number of dissimilarities between the two.  
According to 'Aadhar' Bill 2016, if a person has resided in the country for 182 days or more, he/she is entitled to get an 'Aadhar Card'. According to this bill, a person is entitled to avail of a subsidy or a service from the government; he must either possess an 'Aadhar Card' or has applied for the same. These provisions were not there in 'Aadhar' Bill 2010. According to 'Aadhar' Bill 2016, information related to an Aadhaar number holder’s fingerprints and iris scan shall not be published or displayed publicly, except for purposes specified by regulations. When authenticating an individual’s identity, the UID authority cannot reveal information related to iris scan and fingerprints to the entity requesting for authentication. All these provisions were not there in 'Aadhar' Bill 2010. Therefore one can say that an attempt has been made to address the concerns about privacy in 'Aadhar' Bill 2016.
Earlier, when the concept of 'Aadhar Card' was brought in and later on Indian Unique Identity Authority (UIDAI) was given statutory recognition there was no clarity about the usage of the same. For general public, this was merely an easy way to get an identity card. Easy availability of 'Aadhar Card' without there being any proof of citizenship, gave rise to apprehensions that this instrument may provide legitimacy to the foreign intruders (especially from Bangladesh).
Thanks to the techniques and PMJDY, it is now possible to transfer the benefits of subsidy and other services directly to the bank accounts of the beneficiaries, without much cost. Earlier, because of hic-ups in opening a bank account and requirement of minimum balance, a poor person was unable to open an account. However, under Jan-Dhan Yojana, big number of new bank accounts have been opened with zero balance requirements.
Universal coverage of 'Aadhar' is possible in near future, especially after passage of 'Aadhar'  Bill 2016. With almost universal coverage of bank accounts of households and Aadhar card, now it has become easier to transfer benefits, directly to the targeted population. This scheme may save billions of rupee, as now LPG subsidy, food Subsidy, MNREGA wages and many other benefits can reach the targeted beneficiaries without leakage.
The author is Associate Professor, PGDAV College, University of Delhi.
E-mail: ashwanimahajan@rediffmail.com