The woes of inclusion


When the poor subscribe in millions to government sponsored schemes, there are many twists before the benefits can finally reach them. Or sometimes, not reach them.

Numbers tell a story. We already have 150 million subscribers to the Pradhan Mantri Jan Dhan (PMJD) scheme announced in August 2014. That is a phenomenal achievement by any yardstick and doubtless Guinness Book material. It is inspiring to know just what a Prime Minister with good communication skills, campaign abilities and a state owned banking system to command, can achieve. The previous government could only make 100 million accounts over a much longer period.

The story speaks of the estimated 300 odd million absolutely poor people in our country, 150 million of whom responded to the media and cell phone campaign rather quickly. It tells us something about the degree of penetration of these modes of communication. These new account holders craved to be included and must have travelled some miles in the remote villages and small towns to use their Aadhar cards thus. That also tells us about the degree of despair and hope. Despair, because almost 82 million (i.e. 71%) according to recent reports do not have any money at all to put into these accounts, not even a few hundred rupees (these are being called zero balance accounts with no frills).

Private banks account for only 3.6% of the total ‘Jan Dhan’ accounts with a smaller proportion of zero balance accounts. So the bulk of these accounts are in the public sector banks. The rest of the accounts do not have more than an average deposit of Rs. 500 per account. The story paints a picture of penury. The lure of subsidy on LPG and other ‘Direct Benefits Transfers’ if any, therefore remains powerful. One can only infer that the ones who responded to the campaign were better informed, perhaps better off among the poor and they were not already included in the previous financial inclusion drive. So they put aside time and money to travel to the nearest banks and stand in long lines all day.

The story has a climax. The PMJD scheme was soon declared a demand-based success. Ten months later we have some more schemes under the same ‘National Mission for Financial Inclusion’ (NMFI), the most noteworthy being ‘Atal Pension Yojana’ (PMAP). The official website says that ‘Atal Pension Yojana was launched in continuation to the ‘Jan Dhan Yojana’ scheme to bring those employed in rural and unorganised sector under the ambit of pension schemes.

These workers live an insecure life since banking and pension products do not reach them from the employers, and thus Yojana would at least ensure them of the basic requirement for old age. The idea of the scheme is “to provide a definite pension to all Indians”. To get pension during their old age, they need to contribute accordingly. The more they can contribute regularly now, the more pension they get during old age. The scheme is backed by the Ministry of Finance, Government of India. It requires that a declared amount be auto deducted from Jan Dhan accounts. For those who have nothing or nearly nothing in their Jan Dhan accounts contributing to pension may seem like a preposterous story.

There is a sub plot to enhance social security. If not in this life than in death there may be a better landing. There is a new ‘Pradhan Mantri Jeevan Jyoti Beema Yojana’. Here according to the website there is a ‘renewable life insurance cover of Rs. 2 lakhs on the mere premium of Rs. 330. The premium will be auto debited from account’. Any Indian resident between the ages of 18-50 can avail of this opportunity to leave Rs. 2 lakhs to a nominee in case he or she dies due to any reason. LIC, the public sector insurance giant will be the main administrator of this small mercy. To get any benefit the Jan Dhan accounts have to be active and with more than zero balance.

The valiant public sector bank staff who have dealt with the deluge of demand for inclusion after ‘identification and authentication’ have done so in record breaking time despite a shrinking staff and reduced rural spread. But that is yet another story.


Anuradha Kalhan

The writer is a Fellow at Teen Murti, Nehru Memorial Museum and Library (NMML).