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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.

  1. 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.
  2. 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.
  3. 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

December 2023