UPSC Mains Answer Writing

Table of Contents

Structure

  1. Explain, what is JAM and why it is needed?
  2. Role of JAM in stopping leakages and enhancing control of central government on administrative challenges
  3. Recommendations by Economic Survey
  4. Way forward

Model Answer

The JAM scheme integrates 3 components viz. Jan-Dhan Yojna, Aadhar unique identification number, and Mobile technology to enforce Direct Benefit Transfer (DBT) on a large scale and provide more fiscal space to the Central Government. In India, leakage of subsidy money to rich is “almost intrinsic” problem to its anti-poverty and social programmes. Much of the money is funneled through India’s convoluted bureaucracy and ends up leaking to non-poor and local corrupt actors. In such a condition, JAM is the way out.

          Jan-Dhan Yojana provides basic financial services to the underprivileged sections of society by leveraging technology. It has phenomenal uptake since its inception and has provided the majority of the Indian population with basic banking facilities. Aadhar Unique Identification Number makes it easy for the government to identify the beneficiary and transferring money to his account. It makes easier the tackling of ‘last-mile challenge’ of getting money from banks into beneficiaries’ hands. Mobile makes an ideal medium for achieving this objective. India’s mobile penetration is expected to reach 85-90% by 2020.

          The introduction of JAM has multiple impacts on Direct Benefit Transfer (DBT). It has reduced leakages in the subsidies by eliminating middle-men. It has aided in trimming idle funds, thereby enhancing ease of doing business with the government. Savings to exchequer from DBT are expected to reach Rs 40000 crore in 2018-19. Most importantly, the scheme has familiarised the rural population with the concept of financial savings, which in turn has reduced gold imports into the country which will lead to reduction in the current account deficit and boost to GDP output. The introduction of JAM in schemes like PAHAL (LPG Subsidy), Public Distribution System (PDS), MGNREGS, NSAP (Social Assistance), Scholarship Schemes, and other such schemes has shown widespread impact and has boosted people’s faith in the system.

          The Economic Survey of 2017 suggests two considerations for applying JAM in a area-

  1. Amount of leakages- Higher the amount of leakages, Introduction of JAM will give higher returns to the government
  2. Control of the Central Government– It will reduce the administrative challenges of co-ordination and political challenges of opposition by interest groups.

Also, various JAM- Preparedness Indices for urban and rural areas in each state and Biometrically Authenticated Physical Update (BAPU)- Preparedness Index track the effectiveness of the implementation of JAM with respect to a area.

Introduction of DBT in LPG and MGNREGS have proved that use of JAM can considerably reduce leakages, reduce idle funds, lower corruption and improve ease of doing business with the government. Despite huge improvements in financial inclusion due to Jan Dhan, JAM Preparedness indicators suggest that there is still long way to go. Center can invest in last-mile financial inclusion via further improving Banking Correpondent networks and promoting the spread of the mobile money.  In the meantime models like BAPU can be used as an alternative to reduce the leakages.

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