Large-scale, technology-enabled, real-time Direct Benefit Transfers can improve the economic lives of India’s poor, and the JAM Trinity (Jan Dhan, Aadhaar, Mobile) can help the government implement them. Over the past year, JAM has deepened its coverage at an astonishing rate creating around 4 million accounts per week and several mobile money operators were licensed. Cash transfers can directly improve the economic lives of India’s poor, and raise economic efficiency by reducing leakages and market distortions. Implementing Direct Benefit Transfers (DBT) at large-scale and in real-time remains one of the government’s key objectives, and significant progress has been made in the past year.
Ingredients of JAM
The essential components for JAM are listed below:
Government —» Beneficiary
The challenge of identification: To identify the beneficiaries, the government needs databases of eligible individuals. Beneficiary databases have existed for long before Aadhaar, but their accuracy and legitimacy have been hampered by the administrative and political discretion involved in granting identity proofs like BPL cards, driving licenses and voter IDs. Ghost and duplicate names crept into beneficiary lists, leading to leakage.
Government —> Bank
the challenge of payment: After identifying beneficiaries, the government must transfer money to them, for which the government needs their account numbers. This constraint has been eased by the Pradhan Mantri Jan Dhan Yojana, under which 120 million accounts were created in the last year alone at a blistering, record-setting pace of over 3 lakh accounts per day. Despite Jan Dhan’s record-breaking feats, basic savings account penetration in most states is still relatively.
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