Getting cash transfers out of JAM

Context: In light of COVID Pandemic, it is necessary to rethink benefit transfer methodologies. As Jan Dhan Yojana (JDY) of JAM trinity (Jan Dhan-Aadhaar-Mobile) approach turns out to fare poorly on several counts.

Challenges with JDY

• Fancy digital payment: Believed as a tool of emergency relief, it has not fulfilled it promise. For e.g. peoples still are running pillars to post to collect meagre benefits.

• Dormant Accounts: Problems due to Aadhar duplication, incomplete e-KYC norms etc.

• Exclusion Errors : According to Yale study, less than half of the poor adult women have JDY accounts.

• Inclusion Errors: JDY accounts are both for poor and non-poor. 

• Technological glitches: Recent surges in transactions have shot up the glitches which remains unkindly to the poor, unable to complete timely ex-post biometric authentication.

Solutions lying in  NREGA

• More transparent: As opposed to JDY accounts which are full of bogus accounts and marred with dormancy.

• Similar registered beneficiaries: NREGA complemented with social security pensions would further remove exclusion errors.

• More accurate: Actual poor population is present in NREGA as oppose to JDY where middle class also can have an account.

• Cash-in-hand: Transparent list and recursive list available with gram panchayat makes cash in hand efficient. It seems anti-thesis to JAM but can come in handy in case of bank stress.

Way Forward:

One size fit all approach should be avoided. Many states like Odisha, Tamilnadu have resorted to cash transfers during lockdown. Central govt. could do well considering other options.