The Jan Dhan-Aadhaar-Mobile (sometimes referred to as: JAM trinity) has been propounded as a dream cash-transfer infrastructure for India.
It was born in chapter 3 of the Economic Survey 2015, titled “Wiping every tear from every eye: The JAM number trinity solution”.
An illusion and its fading
- 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.
- JAM project latched on to another flourishing narrative, Universal Basic Income (UBI). In the early days of the COVID-19 crisis, JAM was often invoked (sometimes along with UBI), however, poor people who were far from using the digital-payment systems were still running from pillar to post to collect their meagre benefits from old-fashioned bank accounts.
- Long bank queues and related hardships have started emerging, especially in rural areas where the density of banks is relatively low.
Reliability on JAM during these times: Issues with JDY Accounts
The lead cash-relief measure in the national relief package consists of monthly transfers of ₹500 to women’s JDY accounts.
- During the frantic initial JDY wave, in 2014-15, banks opened JDY accounts en masse to meet the targets – many accounts were opened without informed consent, duplicate accounts flourished, Aadhaar numbers were seeded without any safeguards, and so on.
- According to a recent Yale study, less than half of poor adult women have a JDY account. Hence, cash transfers to women’s JDY accounts are likely to involve large exclusion errors.
- JDY accounts are for everyone, National Election Studies 2019 data show that JDY beneficiaries tend to be better-off than NREGA beneficiaries. Survey suggests that the probability of having a JDY account is more or less the same for poor and non-poor households. Hence, inclusion errors are also likely to be larger in the JDY approach.
Back to cash in hand?
- There have been significant issues with NREGA payments, often related to Aadhaar.
- Numerous “direct benefit transfer” schemes 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.
- The job-cards list is a transparent, recursive household list with village and gram panchayat identifiers, while the list of JDY accounts is an opaque list of individual bank accounts.
- Cash-in-hand may seem like the antithesis of JAM, but this option may become important in the near future if the banking system comes under further stress.
-Source: The Hindu