Is India Ready to Jam?

Abstract

The Indian government’s JAM trinity comprises three components: Jan Dhan bank account, Aadhaar unique identity number and mobile phone. A combination of these three elements is seen as the pathway to implementing large-scale direct benefit transfers in India. The Jan Dhan Ayojana (Peoples’ Wealth Scheme) is a government scheme that aims to expand and make affordable access to financial services such as bank accounts, remittances, credit, insurance and pensions to the poor in India. This has seen a phenomenal uptake within the first few years, with an average of 2 million accounts per week. The Jan Dhan scheme was awarded a Guinness World Record for opening the most bank accounts in a single week (18 million during August 23-29, 2014). The second component is the unique identity number, Aadhaar, which is nearly universal today within the country. In early 2017, the Government of India declared that more than 1.1 billion people have an Aadhaar number, covering more than 99 percent of the Indian adult population. The third component is access to mobile phones, and this has spread across the country, mostly through private licensed operators. In India, it is not unusual for the rich to receive more welfare money than the poor. As India’s Finance Ministry noted in its annual Economic Survey released in January 2017, the problem is “almost intrinsic” to the country’s anti-poverty and social programmes. Much of the money is funnelled through India’s convoluted bureaucracy and ends up “leaking to non-poor and…corrupt local actors.” But a new promising idea is catching hold: real time, technology-enabled Direct Benefit Transfers (DBTs). The Economic Survey 2016 reported that introduction of DBT of LPG subsidies in the PAHAL scheme reduced leakages by 24 percent. Increasingly, more subsidy schemes are considering this route. It is therefore, important to take stock of the preparedness for this transition across the country. To assess the state’s capability to implement DBTs, we calculate JAM preparedness indexes using household-level data. We prepare these indexes combining data on whether households have at least one bank account, whether at least one member of the household possesses an Aadhaar identification number, and whether the household owns a mobile phone.