JAM: Scheme for social and economic inclusion


Finance Minister Arun Jaitley on Sunday said that Jan Dhan, Aadhaar and mobile revolution will ensure economic and social inclusion.


  • The Finance Minister also said that the government now makes direct transfers worth Rs. 74,000 crore to the financial accounts of 35 crore beneficiaries annually under various government schemes like PAHAL, MNREGA, old age pensions and student scholarships
  • Finance Minister Arun Jaitley also praised the government’s flagship programme Pradhan Mantri Jan Dhan Yojana (PMJDY) on the completion of its three years.

What is the present status of financial inclusion in India?

  • Presently, about 52.4 crore unique Aadhaar numbers are linked to 73.6 crore accounts in India.
  • The number of PMJDY accounts opened stood at 29.52 crore as of August 16, up from 12.55 crore in January 2015.
  • The number of rural PMJDY accounts grew from 7.54 crore to 17.64.
  • The number of RuPay cards issued increased from 11.08 crore to 22.71 crore.
  • The total balance in beneficiary accounts stood at Rs. 65,844.68 crore and the average balance per account increased from Rs. 837 in January 2015 to Rs. 2,231 as of August 16, 2017 and the proportion of zero balance accounts fell from 76.81% in September 2014 to 21.41%.
  • As of March 2014, women constituted about 28% of all savings accounts, with 33.69 crore accounts.
  • As of March 2017, according to data from top 40 banks and regional rural banks, women’s share has risen to about 40%.

What is JAM?

  • The JAM is the abbreviation form of Jan Dhan Yojana , Aadhaar and Mobile number.
  • The government has launched this scheme to deliver direct benefit  to India’ poor.
  • The scheme brought together financial inclusion, biometric identification (Aadhaar) and mobile telecommunications
  • The JAM (short for Jan Dhan-Aadhaar-Mobile) trinity was first proposed in the Economic Survey 2014-15.

What was the need of JAM?

  • Economic Survey 2015-16 pointed out that in rural areas; the level of preparedness for implementation of the JAM trinity for effective delivery of the government’s social security schemes is low.
  • According to the economic survey, about 3.75 lakh crore or 4.2% of GDP is currently spent on key subsidies.
  • Due to deficit of funds year after year, government is perpetually short of cash to fund the schemes
  • The survey also stressed the need for improving the business correspondent (BC) network to ensure that the exclusion risk is satisfactorily addressed.

What are the objectives of the scheme?

  • JAM trinity plant to directly transfer subsidies to intended beneficiaries and eliminate intermediaries and leakages.
  • The goal of the policy is to replace the use  of cash, either in government transactions or in regular commerce, by providing the necessary incentives to use digital financial transactions over a period of time through policy intervention.
  • The policy will strengthen financial inclusion as it will be ensured that each eligible account holder under the Pradhan Mantri Jan Dhan Yojana is provided access to digital financial services in addition to the RuPay Card.

What are the benefits of JAM?

Benefits to different stakeholders:

1-       For poor:

  • The scheme would bring all Indians into the mainstream and would end the social as well as economic exclusion.
  • The poor people are able to make payments electronically.
  • The poor will have access to financial services.

2– For government:

  • The government will be strengthened because it can transfer resources to citizens faster and more reliably and with less leakage.
  • The government finances will be improved because of the reduced subsidy burden.
  • It will help government to identify various beneficiaries of various schemes and directly send them cash

3-       For the economy:

  •  It will be generate huge infrastructure available at lower cost.
  • This will also bring efficiency in payments system and ensure that merchants/consumers can leverage their credit history to access instant, low-cost micro-credit through digital means and create necessary linkages between payments transaction history and credit information.

What are the Challenges?

  • Lack of infrastructure
  • Lack of financial inclusion opportunities for Indian citizens
  • The process of putting  new infrastructure in place can be extremely disruptive, as uneducated people will not understand new procedures.
  • Inadequate account opening and less banks Penetration: still many landless farmers and households with no ration cards are left behind
  • Aadhar accounts are not sufficiently opened as certain issues like privacy are affecting its credibility
  • Lack of awareness about the scheme
  • Some concerns about the effectiveness of DBT to all schemes eg farmers are criticising they it would be difficult to pay high upfront costs for fertiliser and then wait for payments through banks.

What measures   are  needed?

  • Finance ministry should provide adequate and timely disbursement of transaction processing charges for the bank and agent network
  • Increasing penetration of banks and financial institutions in rural areas.
  • Capacity building measures for the  frontline banking staff
  • Addressing privacy concerns through enactment of legislation
  • Strict monitoring of subsidy routes. Any suspicious activity should be thoroughly investigated by vigilance agencies
  • Cash withdrawal centres such as ATMs should be nearby to commonplaces
  • Banking Corresponding agents can be used to educate farmers not to fall into traps of moneylenders. This would result in people using more of their JanDhan account
  • Many of Indian villages till now don’t even have electricity. There is need for infrastructure like cellular towers, cheap mobile plans because without mobile connectivity JAM would be meaningless
  • Government should see to it that various schemes like Smart City, Skill India, Digital India, Make In India are integrated with JAM and DBT so that less leakage and more productive results are achieved faster.
Print Friendly and PDF