Making Social Schemes Work

Modi Sarkar’s laudable social schemes need to guard against several pitfalls


The Modi government seems really serious about financial inclusion and keen on providing some form of social security to the poorest people of India. The Pradhan Mantri Jan Dhan Yojana (PMJDY) along with the two insurance schemes (Jeeven Jyoti and Jeevan Suraksha) can, indeed, be game-changers in meeting the government’s objectives. 
PMJDY is a no-frills savings bank account with built-in incentives to keep it operational. It comes with a RuPay debit card, an accident insurance cover of Rs1 lakh, the possibility of a bank overdraft of Rs5,000, if kept active for six months; there was an additional life insurance cover of Rs30,000 for accounts that were opened before 
26 January 2015. Importantly, the National Payments Corporation of India’s (NCPI) technology would allow account-holders to conduct transactions and transfer funds even with ordinary mobile phones. 
The government claims that 140 million PMJDY accounts have been opened. Anecdotal evidence gathered by us suggests that there could be massive duplication of accounts, since bankers were under extraordinary pressure to meet account-opening targets. The finance ministry is now cross-verifying rural PMJDY accounts with census data to eliminate duplication. But sources say that multiple accounts in urban and semi-urban areas could be an issue. 

While this clean-up exercise was on, the government has announced two path-breaking insurance schemes to bring in the social security aspect. Jeevan Suraksha Bima is an accident insurance cover of Rs2 lakh available to a savings bank account-holder between the ages of 18-70 years; it covers death and disability at an incredibly low premium of just Rs12 per year. The Jeevan Jyoti Bima provides life insurance to a savings bank account-holder of age 18 to 50 years for a premium of Rs330 per annum on the submission just a vague self-certificate of good health. A 31st May deadline on the schemes has triggered a rush for subscription. The true test of these schemes will be in paying genuine claims in a fair and hassle-free manner; but that will only be tested at some future date. 
Everything that the NDA government is doing is on a huge scale and the prime minister (PM) has been convinced that a biometric linkage (Aadhaar number) is the fastest way to leapfrog all issues related to identity that plague the poorest segments of our population—a mammoth 300 million people. So, the government seems determined to achieve its objective of financial inclusion even if it means working around the Supreme Court on making Aadhaar mandatory, and ignoring all the doubts and questions about a hasty actual rollout.  
Indeed, the biggest growth stories in retail banking and e-commerce of private sector companies have happened this way. A fast and furious nationwide rollout is planned and implemented; so long as mistakes, mishandling and grievances are low, it leads to transformational change. Every online shopper has tales of wrong deliveries, delays and forgotten products, but the benefits and cost advantage outweigh the negatives. Shouldn’t we show the same tolerance and tempered expectation from a government exercise that can transform lives, especially of poor, underprivileged Indians?
Yes, we must. But, unless we flag potential pain-points and the need to put in place a robust mechanism to redress grievances, the initiatives will flounder. So let us start with two examples. 
A recent report on says that the first experiment with cash transfers to PMJDY accounts, which was rolled out in Puducherry, has been buried in just eight weeks. For decades, economists have touted cash transfers as a better alternative to public distribution system (PDS) for food. The Puducherry experiment exposed some fundamental flaws. 
Direct cash transfer of benefits to PMJDY accounts began in Puducherry in February this year when the government decided to transfer Rs300 into banks accounts every month, in lieu of 10 kilos of rice and other grain distributed free through the PDS. The beneficiaries were expected to use the money to buy grain at market rates. Over Rs18 crore was transferred into the bank accounts of 300,000 households to replace the 10kg of free rice that they got from ration shops every month. The payment was based on the current cost of rice in the retail market. 
However, the project reportedly ran into trouble on several counts. Puducherry had around 400 ration shops but only 100 bank branches. For many beneficiaries, withdrawing their funds from the bank and purchasing the rice entailed significant cost and effort. Secondly, beneficiaries who had borrowed from self-help groups (SHGs) found that their money was auto-debited by the bank and adjusted against borrowings. Auto debits, a common practice by banks, are guaranteed to destroy any banking scheme aimed at the poor who have no regular income and surpluses. Worse, instead of a ‘direct benefit’, it could end up causing poor families to starve; but more of that later. A third worry was that free rice feeds entire families, while cash is often taken away by men to buy alcohol. This is a real and well-documented problem across the poorest regions in India. At Puducherry, these problems were set to turn into an agitation when the chief minister wisely scrapped the cash transfer scheme.
A different problem was encountered at Paderu in Vishakapatnam, leading to public protests. Local activist, PS Ajay Kumar of APVVU (Andhra Pradesh Vyavasaya Vrittidarula Union), says that ration cards of 299 vulnerable tribals from remote localities have vanished in the attempt to create an e-pass system by linking them to the Aadhaar database. Consequently, the tribals have not received their rations since April. Former Union secretary EAS Sarma, who is a now a highly respected activist in Vishakapatnam, says that getting Aadhaar itself is a traumatic experience in many areas. Many tribals from remote areas have had to forego three to four days of livelihood to make repeated visits to Aadhaar registration centres, often to find that names and addresses are wrongly recorded. Or, as in this case, the ration cards have vanished.
Mr Sarma says that a survey conducted by an NGO showed that cyclone relief (in October 2014) and subsidies have not been credited to beneficiary accounts, contrary to government claims. One can only imagine the trauma of families who do not receive much-needed grain through ration shops because of glitches in the system. According to Ajay Kumar, some tribals who hold valid job cards under MGNREGS were threatened with the cancellation of their ration cards if they didn’t get Aadhaar cards within five days. He points out that this constitutes a violation of two Supreme Court orders—on the Right to Food and on making Aadhaar mandatory.
The lesson here is that the ruling government in Delhi may be truly well-intentioned but this story of callous and inhuman treatment of poor and illiterate people is bound to be repeated all over the country. 
This is evident in the attitude of bankers and policy-makers. They are extremely upbeat about 33 types of State subsidies being credited to the PMJDY accounts. They openly say that these benefits will be debited to recover interest on the Rs5,000 overdraft offered to PMJDY account-holders and other dues. Imagine what would happen to people with little or no earnings, if the premium for their life and accident insurance were directly debited from the tiny subsidies and benefits credited to their PMJDY accounts? 
Unlike glitches in online shopping or cab services, or direct debits from accounts of the middle-class account-holders, in PMJDY accounts, such debits would mean no food on the plate for really poor families. The backlash will be sharp and may have political consequences. Significantly, hardly anyone in the government has paid attention to how credit information companies (CICs) will treat PMJDY accounts. CICs already collect data from microfinance companies about their borrowers. When earnings are erratic, the repayment record is bound to be patchy. Unless there is well thought out plan in place, a combination of financial illiteracy, direct debits and credit scores will exclude PMJDY account-holders from the system, just as fast as they have been included! 



Parimal Shah

2 years ago

To put things right following can, and must, be done:

1.Get the scalps of those involved in fleecing the Tribals. One or two such head rolling will send strong signal to others indulging in such activities.
2.Instruct banks not to autodebit in case of no frill accounts.
3. Withdrawal of cash can be done only after a payment to a grocery shop equivalent to price of eligible grains etc.


2 years ago

if old age pension is reaching the needy then Rs 12/- life cover upto age 70 will be taken care. Similarly can any one inform which insurance company is giving term policy life cover upto age of 50 for an annual premium. Both these products are very vital only a family which had suffered under death without life insurance will under stand the significance of the scheme. Now coming to the ration subsidy this better than allowing ration shop o divert the subsidised food grains. Yes Modi led Govt had failed to control food inflation. PDS is better than cash subsidy but as rouge PDS shop keepers could not be kept under leash the cash subsidy came. Now those who drink and die we should ignore them. Prohibition like in Gujrat is a farce.


2 years ago

What social schemes. Only for a part of population? There are more than eleven crore Senior Citizens, who have very limited means to survive gracefully. They are all excluded from these Social Schemes. Age cap for coverage is put either 50,60 or 70. It appears for Modi, there are no humans beyond 70 years. Now it is a minus point to havea longer life span.


2 years ago

Very well articulated analysis

Modi is effective but graft, land bill, inflation remain issues: Survey

On corruption, which was a major electoral plank for the Bharatiya Janata Party in the run-up to the elections last year, more than 60 percent of the people polled felt the levels have either increased or seen no improvement, and just 12 percent agreed that graft has declined


Seventy-two percent of the people feel satisfied with the performance of Prime Minister Narendra Modi, according to a survey on one year of his government, but the majority also sees no let-up in graft, and more seem opposed to than supportive of his controversial land acquisition bill.
According to the survey conducted by Axis My India for IBN Network/#Modi365, the majority of the 20,000 people polled in 23 states, across 155 districts, with a 70:30 rural-urban spread, the main reason for satisfaction has been overall development, skillful governance and lower prices.
The reactions of people in the survey, shared with IANS, also dwelt upon the policies being pursued by the prime minister, and notably over 35 percent did not support the controversial land acquisition bill, an equal number were undecided and only 28 percent were supported it.
On corruption, which was a major electoral plank for the Bharatiya Janata Party in the run-up to the elections last year, more than 60 percent of the people polled felt the levels have either increased or seen no improvement, and just 12 percent agreed that graft has declined.
According to the survey, 56 percent of the people felt Narendra Modi was fast and effective as prime minister, an overwhelming 85 percent endorsed Swachch Bharat as his best initiative, and 76 percent listed his Jan Dhan Yojana as second best.
For his two other initiatives, Make In India received the support of 43 percent people, Digital India got the approval of 42 percent. 
Reactions also came on some of the controversies that hit the government and the ruling party during the past year. 
Some 34 percent of the people felt statements on "ghar vapsi", or re-conversion, dented the Modi government's image, 32 percent felt it had no impact, and nearly 35 percent were undecided on it.
Similarly, over 43 percent wanted Modi to rein in his cabinet colleagues who have made it a habit to make some controversial statements, and only 26 percent disagreed with the view.
There also appeared to be no clarity in the interference from the Rashtriya Swayamsevak Sangh, the ideological parent of the ruling party of which Modi has been a staunch member, in the functioning of the government.
Some 32 percent felt there was RSS intrusion, an equal number disagreed and 35 percent were undecided.
Then the question: How is Narendra Modi as prime minister? Nearly 57 percent opted for effective and fast, 15 percent for ineffective and slow, 2.6 percent for no will power, 3.7 percent for not so strict, 6.1 percent for clean image but not a good administrator, and 13.5 percent for less work, more talk.
Regarding the individual's economic improvement during the year, while 42 percent of respondents felt there was "better improvement", a little over 5.5 percent felt their condition has worsened.
The percentages were similar for perceptions about the overall economic condition of the nation. Over 43 percent felt there was "better improvement" and over 20 percent thought there was very good improvement.
Salient points of the Axis My India survey:
* Over 72 percent satisfied with Modi government in last one year, attributed to development, skillful governance, lower prices.
# 26 percent dissatisfied with government for want of development, with just over 14 percent attributing it to price rise.
* 56 percent feel Narendra Modi fast and effective as Prime Minister, while 13 percent say Modi is less work and more talk. 
# For 15 percent he is slow and ineffective, while over six percent say he has a clean image but is not a good administrator.
* 61 percent say their economic conditions have improved, while 63 percent say India's economic situation too has improved.
# 55 percent feel corruption has either come down or remained the same and 47 percent say inflation is down or has remained the same.
* Confusion over land bill -- Over 35 percent do not support the Land Bill, an equal number undecided, leaving only 28 percent supporting the bill.
# 43 percent support Make In India, and 42 percent say yes to Digital India. 
* 32.35 percent feel RSS interferes in government functioning, 35 percent are undecided, while 32.64 percent disagree there is interference. 
# 33.65 percent say Ghar Wapsi comments dent Modi government image, 34.59 percent are undecided on the issue, and 31.76 percent say such statements do not dent government image. 


CID quizzes suspended Bengaluru cop on lottery scam

An IPS officer of 1994 batch, Kumar's name figured two-three times along with that of five other high-ranking police officers in the report on the multi-crore lottery scam, thriving across Karnataka despite an official ban


CID sleuths on Sunday interrogated suspended Bengaluru additional commissioner of police Alok Kumar on his alleged nexus with lottery scam kingpin Peri Rajan.
"A team of four officers interrogated Kumar for over seven hours since afternoon on his meetings and conversations with Rajan on the basis of mobile and landline call records in connection with the illegal single digit lottery scheme in the state," a CID official, speaking on condition of anonymity, told IANS.
As the interrogation will continue on Monday, the official declined to share more details but said the role of other serving and retired police officers who figure in the CID report would be investigated.
An IPS officer of 1994 batch, Kumar's name figured two-three times along with that of five other high-ranking police officers in the report on the multi-crore lottery scam, thriving across Karnataka despite an official ban, as such schemes were operative in neighbouring Andhra Pradesh, Tamil Nadu and Kerala.
The state home ministry ordered a CID probe into the scam after a Kannada news channel telecast in April a sting operation on Rajan who boasted connections with top police officials and that "the law dare not touch him".
Though the CID sleuths took Rajan into police custody at Bangarpet in Kolar, his arrest was not made public.
Earlier, Superintendent of Police, Lottery Squad, Dharanesh was suspended earlier this month, as he was heard talking to Rajan in the sting operation's video clip.
In addition, names of a serving additional director general of police and inspector general of police, and retired director general of police Shankar Bidari and another ADGP figure in the CID report.
"Kumar has been accused of interfering with the CID probe into the lottery scam and attempting to prevent Rajan's arrest by calling up the jurisdictional sub inspector at Bangarpet on April 28," the official said quoting from the interim report.
Kumar, however, told the probe team that though he knew Rajan as a friend and a well-wisher, he was not aware of the latter's illegal activities such as operating the lottery scheme of other states in Karnataka despite the ban.
"I was introduced to Rajan four-five years ago and has been meeting me now and then. But I never knew he was into such activities," h said in his defence.
Bidari too denied knowing Rajan and refuted charges levelled by Janata Dal-Secular lawmaker and former chief minister H.D. Kumaraswamy of involvement in the scam.


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