Jan Dhan-Aadhaar-Mobile (JAM) trinity for direct benefit transfer

The groundwork for Jan Dhan-Aadhaar-Mobile (JAM) trinity that was first proposed in the Economic Survey 2014-15 has begun with the government having started linking the Jan Dhan scheme, Aadhaar numbers and mobile numbers of individuals.

Finance minister ArunJaitley, delivering the K.R. Narayanan Memorial Lecture at the Australian National University, Canberra, said the database of 1.2 billion bank accounts, when linked with 900 million mobile phones and about 1 billion Aadhaarnumbers, would effectively ensure the subsidies reach only those who actually need them.

“So far, our estimates show about Rs.170 billion (Rs.17,000crore) of subsidy has been saved on cooking gas alone. Parliament has now approved the bill granting statutory status to Aadhaar which will further accelerate Aadhaar seeding in bank accounts,” he said.

The ambitious plan once rolled out, will lead to a direct transfer of subsidies to intended beneficiaries and eliminate intermediaries and leakages.

However, according to Economic Survey 2015-16, rural areas are still not prepared for effective delivery of the government’s social security schemes. With last-mile financial inclusion still not achieved, the survey stressed the need to work on the business correspondent (BC) network to ensure that the exclusion risk is satisfactorily addressed.The recent licensing of new banks will help in this. It also pitched for increasing the commission rates for business correspondents to ensure they are incentivized to remain active.

“Despite huge improvements in financial inclusion due to Jan Dhan, the JAM preparedness indicators suggest there is still some way to go before bank-beneficiary linkages are strong enough to pursue DBT without committing exclusion errors. In that sense, the JAM agenda is currently jammed by the last-mile challenge of getting money from banks into beneficiaries’ hands, especially in rural India,” the survey said.

The Finance minister said that the government was also bringing about several reform measures for the promotion of payments through cards and digital means. The cabinet in February approved measures to promote payments through cards and other electronic means to check tax evasion and ease the transition to a cashless economy.

The Finance minister said the government was also bringing about several reform measures for the promotion of payments through cards and digital means. The cabinet in February approved measures to promote payments through cards and other electronic means to check tax evasion and ease the transition to a cashless economy.

“The goal of the proposed policy changes is to replace the use of cash, either in government transactions or in regular commerce, by providing the necessary incentives to use digital financial transactions over a period of time through policy intervention. These measures will further strengthen our efforts in financial inclusion as it will be ensured that each eligible account holder under the PradhanMantri Jan DhanYojana is provided access to digital financial services in addition to the RuPay Card,” Jaitley said.

In this regard, Jaitley said the government was developing PayGov India, which will be developed as a “single unified portal” across central, state governments and their public sector undertakings for collection purposes.