THE GIST of Editorial for UPSC Exams : 13 May 2020 (Getting cash transfers out of a JAM (The Hindu))

Getting cash transfers out of a JAM (The Hindu)

Mains Paper 3: Economy
Prelims level: JAM trinity
Mains level: Economic inclusion through welfare of schemes

Context:

For some years now, the so-called JAM trinity (Jan Dhan-Aadhaar-Mobile) has been propounded as a dream cash-transfer infrastructure for India.
The term “trinity” itself gives a sense of the faith and fervour this project sought to inspire (why not “trio”?).
It was born in chapter 3 of the Economic Survey 2015, titled “Wiping every tear from every eye: The JAM number trinity solution”.
This early JAM promo humbly concluded that “nirvana today seems within reach”. The same lyrical tone can be found in the following year’s Economic Survey, where JAM’s virtues were praised once again.

What JAM really means?

In practical terms, is conveniently vague. The original formulation, in 2015, mentioned two possible incarnations of the trinity: mobile banking and post office payments.
The second option never made much headway, perhaps because it did not have enough scope for private profit. So Aadhaar-enabled mobile banking became the supreme goal.
Earlier, NITI Aayog CEO Amitabh Kant predicted .................................................................

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But is that a good idea?

One way to think about this is to compare women’s JDY accounts with another possible basis for cash transfers, at least in rural areas: the list of households that have a National Rural Employment Guarantee Act (NREGA) job card.
The numbers of accounts are roughly comparable: about 14 crore for NREGA job cards, and 12 crore or so for women’s JDY accounts in rural and semi-urban areas (assuming that the gender distribution of accounts is similar in rural and urban areas).
For purposes of cash relief, the JDY approach turns out to fare poorly on several counts.

Errors galore:

JDY accounts are a mighty mess:The NREGA job-cards list is far more transparent and well-organised. During the frantic initial JDY wave, in 2014-15, banks opened JDY accounts en masse to meet the targets.
Banking norms went for a toss: Many ....................................................

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Large exclusion errors:

According to a recent Yale study, less than half of poor adult women have a JDY account (an even lower proportion, 21%, know that they have a JDY account).
The study mentioned earlier finds that the proportion of poor households where at least one adult woman has a JDY account is just 57%.
The NREGA job-card list is likely to have much better coverage of poor households. The natural complementarity between NREGA and social security pensions (covering more than four crore persons under the National Social Assistance Programme alone) would further help to reduce exclusion errors.

Inclusion errors larger in the JDY approach:

Job cards are meant for rural workers, JDY accounts are for everyone. National Election Studies 2019 data, analysed by Sanjay Kumar and Shreyas Sardesai, show that JDY beneficiaries tend to be better-off than NREGA beneficiaries.
It suggest that the probability of having a JDY account is more or less the same for poor and non-poor households.
Some of our middle-class female friends have already received SMS alerts informing them that their JDY account has been credited with ₹500 of relief money.

Back to cash in hand?

There have been significant issues (e.g. delayed, rejected, blocked or diverted payments) with NREGA payments, often related to Aadhaar. But then, numerous “direct benefit transfer” schemes (social security pensions, scholarships, maternity benefits, among others) have faced similar problems, also reflected in official transaction data.
Both the Aadhaar Payment Bridge System (APBS) and the Aadhaar-enabled Payment system (AePS) are shot through with technical glitches, possibly exacerbated by the recent surge in transactions, and especially unkind to the powerless.
Transfers to women’s JDY accounts are unlikely to be more reliable than transfers to job-card holders.

Concern for effective payment:

As far as effective payment is concerned, there is a further argument in favour of the NREGA job-cards list: unlike JDY accounts, it lends itself to the “cash-in-hand” method (on-the-spot payment in cash, instead of bank payments) as a possible fallback.
The reason is that the job-................................................................

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Conclusion:

There is nothing compelling about the use of women’s JDY accounts for cash relief. In fact, it is a bit of a shot in the dark.
The central government is unlikely to make a U-turn on this before the end of the Pradhan Mantri Garib Kalyan Yojana’s initial three-month period.
It would do well, however, to consider other options after that, including a switch to the NREGA job-cards list in rural areas.
As for the JAM trinity, it should come down to earth for a reality check.

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General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q1. With reference to a report by the Internet & Mobile Association of India (IAMAI) and Nielsen on internet penetration, consider the following statements:
1. Rural India had 227 million active internet users, 10% more than urban India’s about 205 million, as of November 2019.
2. Active internet users are defined as those who use the internet at least once in a day.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2