Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched on August 28, 2014, with the objective to ensure accessibility to various financial services like availability of basic savings bank account, need-based credit, remittance facility, insurance, micro-credit and pension to the excluded sections, which includes the weaker sections and low-income groups. This deep penetration at an affordable cost is possible only with effective use of technology and for this massive step towards financial inclusion, the credit goes to the Narendra Modi government.
PMJDY is a national mission on financial inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all the households in the country. The plan envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility. In addition, the beneficiaries get RuPay Debit card which comes with an accident insurance cover of Rs 2 lakh. The plan also envisages channeling all government benefits from the Centre, state and local bodies to the beneficiary accounts and pushing the Direct Benefit Transfer (DBT) scheme of the government. Technological issues like poor connectivity and glitches in online transactions have been effectively addressed through mobile transactions in the last seven years. In fact, technology has been used befittingly as a big enabler, something that never happened meaningfully prior to 2014. Also, an effort is being made to reach out to the youth of the country to participate in this programme on a mission-mode basis.
Digital India, an Enabler
Prime Minister Narendra Modi’s Digital India lays out three broad outcomes for technology. These are: technology to transform the lives of citizens, to expand economic opportunities, and to create strategic capabilities in certain technologies. Former PM Rajiv Gandhi had said that in India of the ‘80s, out of benefits worth Re 1, only 15 paise reached the true beneficiary. The remaining 85 paise was gobbled up by middlemen and sarkari babus. Thanks to PM Modi’s Digital India, 100 per cent benefits now reach the beneficiary through DBT. The success of this transformation lies in the vision of PM Modi, in the application of technology, by making use of Aadhaar that has plugged all leakages from the system, eradicated middlemen and prevented endemic corruption that was India’s bane under successive Congress regimes.
Savings made to the public exchequer owing to the use of Aadhaar and DBT, primarily due to weeding out fake and duplicate beneficiaries, have been estimated at over Rs 2.24 lakh crore.
In Uttar Pradesh alone, benefits of over Rs 2.8 lakh crore (cumulative) have been transferred directly into the accounts of beneficiaries. Around 15 crore people in UP have benefitted under the various central/state government schemes through the DBT, by leveraging Aadhaar. Therefore, Aadhar is not just the world’s biggest digital identity programme but also a tool for empowering people by securing their entitlements.
Talking about Aadhaar, over 313 central government schemes have been notified to use Aadhaar for leak-proof delivery of various social welfare benefits like PM-KISAN, PM Awas Yojana, PM Jan Arogya Yojana, PAHAL, MGNREGA, National Social Security Assistance Programme, PDS, and the like. Aadhaar coupled with PMJDY and Mobile (JAM Trinity) have created a robust platform for accelerating financial inclusion. Aadhaar-enabled payment services are providing easy access to banking services by use of fingerprint authentication.
India has developed tremendous capabilities under the Digital India programme started by Prime Minister Narendra Modi in the year 2015. The indigenously developed CoWIN portal, which has ensured administration of over 155 crore vaccinations to date, is a model that has been praised globally and is now being emulated by other countries too. It is a vindication of how India has bridged the digital divide, by making financial inclusion and last-mile delivery workable concepts. The COVID management of the UP government as it successfully leveraged technology by tapping a network of around 1.5 lakh Common Services Centre (CSCs) and 4.5 lakh Village Level Entrepreneurs (VLEs) to facilitate over 20 crore vaccinations in UP, which is over six times the population of Australia, is a sterling example of digital inclusion by the Modi-Yogi double engine sarkaar. With the recently commissioned Aadhaar Seva Kendras (ASKs), in addition to the existing ones, at Gonda, Varanasi, Saharanpur and Moradabad, the citizens of UP will witness the march towards a “Digital Uttar Pradesh”, more swiftly than ever before.
Last year, the proposal to provide monetary assistance to 11.8 crore students (118 million students) through DBT for the cooking cost component of the Mid-Day Meal Scheme to all eligible children as a special welfare measure is yet another example of digital empowerment. This proposal was in addition to the Modi government’s announcement of distribution of free-of-cost food grains at Rs 5 per kg, per person, per month, to nearly 81 crore beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY).
This decision/proposal will help in safeguarding the nutritional levels of children and aid in protecting their immunity during the challenging pandemic times. The Modi government will provide additional funds of about Rs 1200 crore to state governments and UT administrations for this purpose. This one-time special welfare measure of the Union government will benefit about 11.8 crore children studying in Classes 1-8 in 11.20 lakh government and government-aided schools across the country.
The Jan Dhan Revolution
Coming back to Jan Dhan, more than 44.34 crore beneficiaries banked under PMJDY since inception, amounting to transactions worth over Rs 1.55 lakh crore. Over 1.26 lakh Bank Mitras became a part of the Jan Dhan Yojana scheme, to ensure it reached India’s remotest and the poorest. PMJDY accounts have grown over three-fold from 14.72 crore in March 2015 to 44.34 crore, to date.
Over 55 per cent Jan Dhan account holders are women and over 67 per cent Jan Dhan accounts are in rural and semi-urban areas, showcasing PM Modi’s unwavering commitment to last-mile delivery. Of the total 44.34 crore PMJDY accounts, well over 86 per cent are operative, busting the myth peddled by the Opposition that PMJDY is a dormant scheme. Total RuPay cards issued to PMJDY account holders stands at over 31.23 crore.
Under PM Garib Kalyan Yojana, a sum of over Rs 30,945 crore was credited into accounts of women PMJDY account holders during the COVID lockdown. Over 8 crore PMJDY account holders have received direct benefit transfer (DBT) from the Modi government under various welfare schemes, at some point or the other. Overall, to date, over Rs 18 lakh crore has been disbursed via DBT to the needy under the aegis of the Modi government, which is not a mean achievement by any yardstick.
Financial Inclusion is a national priority for the Modi government, as it is an enabler for holistic growth. The journey of PMJDY-led interventions undertaken over a short span of seven years have, in effect, produced both transformational as well as directional change, thereby making the emerging financial ecosystem capable of delivering financial services to the last person of the society and the poorest of the poor. The underlying pillars of PMJDY, namely Banking the Unbanked, Securing the Unsecured and Funding the Unfunded, have made it possible to adopt a multi-stakeholder collaborative approach, while leveraging technology for serving the unserved and underserved areas as well.
Banking the Unbanked pertains to opening of basic savings bank deposit (BSBD) account with minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero balance and zero charges. Securing the Unsecured pertains to issuance of indigenous debit cards for cash withdrawals and payments at merchant locations, with free accident insurance coverage of Rs 2 lakh. Funding the Unfunded pertains to other financial products like micro-insurance, overdraft for consumption, micro-pension and micro-credit. Jan Dhan accounts are online accounts in core banking system of banks, in place of the earlier method of offline accounts. Interoperability through RuPay debit card or Aadhaar-enabled Payment System (AePS) have been force multipliers.
The Modi government decided to extend the comprehensive PMJDY programme beyond 2018 with some modifications. Focus shifted from ‘Every Household’ to ‘Every Unbanked Adult’. Free accidental insurance cover on RuPay cards was increased from Rs 1 lakh to Rs 2 lakh for PMJDY accounts opened after August 28, 2018. Enhancement in overdraft (OD) facilities was enabled, with OD limit doubled from Rs 5000 to Rs 10,000 and with OD up to Rs 2000 given without conditions. The upper age limit for OD was also raised from 60 to 65 years.
PMJDY has been the foundation stone for people-centric economic initiatives. Whether it is direct benefit transfers, COVID-19-related financial assistance, PM-KISAN, increased wages under MGNREGA, life and health insurance cover, the first step of all these initiatives is to provide every adult with a bank account, which PMJDY has been doing on a war footing. One in two bank accounts opened between March 2014 and March 2020 was a PMJDY account. Within 10 days of nationwide lockdown, more than 20 crore PMJDY account of women were credited with ex-gratia.
Jan Dhan provides an avenue to the poor for bringing their savings into the formal financial system, an avenue to remit money to their families in villages besides taking them out of the clutches of the infamous, usurious money lenders. PMJDY has brought the unbanked into the banking system, expanded the financial architecture of India and brought financial inclusion to almost every adult. In present COVID-19 times, we have witnessed the remarkable swiftness and seamlessness with which Direct Benefit Transfers (DBTs) have empowered and provided financial security to the vulnerable sections of society.
An important aspect is that DBTs via PM Jan Dhan accounts have ensured every rupee reaches its intended beneficiary, by preventing systemic leakages. Needless to add that zero tolerance for corruption is not just a slogan or a platitude but an abiding work ethic for the Modi government, with the concept of “Integral Humanism”, embedded in every welfare measure that Prime Minister Modi has so tirelessly worked towards in the last seven years.
Sanju Verma is an Economist, National Spokesperson of the BJP and the Bestselling Author of ‘The Modi Gambit’. The views expressed in this article are those of the author and do not represent the stand of this publication.
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