Getting cash transfers out of a JAM
For effective cash relief in response to the COVID-19 crisis, the government must think beyond the Jan Dhan Yojana
- For some years now, the so-called JAM trinity (Jan Dhan-Aadhaar-Mobile) has been propounded as a dream cash-transfer infrastructure for India.
- The term “trinity” itself gives a sense of the faith and fervour this project sought to inspire.
- It was born in chapter 3 of the Economic Survey 2015, titled “Wiping every tear from every eye: The JAM number trinity solution”.
- This early JAM promo humbly concluded that “nirvana today seems within reach”.
- JAM’s virtues were praised again in the following year’s Economic Survey.
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.
- The intoxication reached new heights as the JAM project latched on to another flourishing narrative — universal basic income (UBI).
- JAM enthusiasts may respond that the central government’s relief package does rely on Jan Dhan Yojana (JDY) — at least the J in the JAM, if not the entire trinity.
- One way to think about this is to compare women’s JDY accounts with another possible basis for cash transfers, at least in rural areas: the list of households that have a National Rural Employment Guarantee Act (NREGA) job card.
- The numbers of accounts are roughly comparable: about 14 crore for NREGA job cards, and 12 crore or so for women’s JDY accounts in rural and semi-urban areas.
- In fact, as far as effective payment is concerned, there is a further argument in favour of the NREGA job-cards list: unlike JDY accounts, it lends itself to the “cash-in-hand” method (on-the-spot payment in cash, instead of bank payments) as a possible fallback.
- The reason is that the job-cards list is a transparent, recursive household list with village and gram panchayat identifiers.
- 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.
- There are precedents of effective use of the cash-in-hand method, notably in Odisha for pension payments and in various States for NREGA wage payments.
- Several States (including Andhra Pradesh, Odisha and Tamil Nadu) have already resorted to cash-in-hand for relief payments during the lockdown.
- In short, there is nothing compelling about the use of women’s JDY accounts for cash relief. In fact, it is a bit of a shot in the dark.
- The central government would do well to consider other options, including a switch to the NREGA job-cards list in rural areas.