Getting cash transfers out of JAM

The Hindu     13th May 2020     Save    
QEP Pocket Notes

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.

QEP Pocket Notes