Jan Dhan Yojana’s triumph shows financial inclusion gaining pace; scheme a launching pad for success of DBT, other products

A child is sometimes force-fed by its affectionate mother. Prime Minister Narendra Modi and his finance ministry colleagues did something similar. They ordered bank branch managers in the hinterlands to go door-to-door or from street-to-street and help people, who do not have a bank account, open savings accounts. Like a child getting nutrition from force-feeding, those left untouched by the banking habits got to savor the fruits of banking services as evidenced by the average balance of Rs 2,000 in the Jan Dhan accounts. The Modi government was lampooned for thrusting bank accounts on the unwilling people in the manner of men being sterilised during the emergency in 1975. But they failed to appreciate the crucial difference — while forced sterilisation amounted to bodily harm on the unwilling, energetic remonstrations to open accounts did no harm whatsoever to anyone. Instead, it created financial awakening among the masses. The total number of Jan Dhan accounts have crossed 35.39 crore at the last count . That is nearly 27.22 percent of the Indian population, an envious statistic and milestone achieved in a short span of time thanks to work being done on a war footing in a mission mode. [caption id=“attachment_4356783” align=“alignleft” width=“380”] Rupee. Representational image. Reuters[/caption] The aggregate deposits in the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts are currently close to Rs 1 lakh crore, having grown ten-fold from the Rs 10,500 crore in the first phase of the scheme in January 2015. That the growth in Jan Dhan accounts is not only in quantitative terms in the sense of the number of accounts but also in qualitative terms is reflected by the ten-fold increase in Jan Dhan deposits with the number of accounts registering only a three-fold increase during the four year period. This is heartening and gives lie to the detractors’ claim that Jan Dhan accounts, by and large, have remained dormant. Allegations of large-scale misuse of Jan Dhan accounts by black money hoarders seeking to convert their illegitimate wealth in cash during demonetisation are yet to be proved. The scrutiny of deposits of demonetised notes into accounts is still being a work in progress. The government doubled the overdraft facility up to Rs 10,000 from the initial Rs 5,000 in October 2018. That the overdraft bait has not enticed the depositors is evident from the overall balance in the accounts registering growth at a healthy clip during these four years which would not have been the case had depositors plumped for overdraft instead. On the other hand, the offer of Rupay card and free accident cover up to Rs 2 lakh have combined to not only entice the hitherto believers in cash but also made them more financially savvy — the importance of insurance being appreciated and the importance of electronic payments also getting firmly etched in their minds. And the conscious effort to shun the ignominy of being indebted which overdraft status implies also getting emphasised. The next logical step should be to wean the account holders, many of them rooted in rural areas, from usurious and ruinous money lenders. Most of the suicides farmers and other small borrowers have committed in the past were driven by the strong arm tactics used by local money lenders and not thanks to the pressure applied by banks as propagated by the uninitiated, oblivious of the rural realities. That is why the repeated farm loan waiver benefits only the kulaks (a category of affluent peasants in erstwhile Soviet Russia) and the other well-heeled who have bank accounts and who avail of bank loans. Indeed, Jan Dhan Yojana has provided a very good launching pad for the success of financial products transcending banking. Direct benefit transfers (DBT) of subsidies have been made largely possible through this initiative. (The writer is a senior columnist and tweets @smurlidharan)