The Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched with much fanfare and was touted at the vehicle to drive India’s poor out of financial untouchability; it remains one of the pet projects of Prime Minister Narendra Modi.
A country dealing with the double whammy of a nightmarish accident toll and a virtually non-existent public health system direly needed insurance cover for accidents causing death or permanent disability. Out of pocket medical expenditure is, after all, recognised by even government officials in India as one of the primary factors pushing the poor into a debt-bondage trap, thereafter confining them to hunger and humiliation.
Key features of the scheme – such as an insurance cover of 1 lakh rupees, followed by a life insurance cover of 30,000 rupees over and above the 1 lakh cover for those opening their bank accounts before January 2015, not to mention the RuPay debit cards – could well have reduced the dependence of the poor on local moneylenders; such moneylenders are often the only source of funds for the poor in times of emergency, and these ready funds come attached with astronomically interest rates. PMJDY, the “game changer” to usher in financial inclusion, also allows an overdraft of 5,000 rupees (an amount that can enslave a poor family for life) on satisfactory operation of the account for six months.
Add up these components and the scheme did seem like it would keep the poor out of the clutches of moneylenders, and provide access to financial services to sections of the society denied the same hitherto. The claim that the scheme could revolutionize a saving culture for the poor, who are otherwise forced to survive on daily basis, seemed like the only hyperbole, for a scheme that otherwise did look like it could deliver as a “game-changer”.
But, proof of the pudding is in its eating, not packaging. And, the PMJDY has proved to be stillborn. A Right to Information request has revealed that 7.88 crore out of the 10.84 crore accounts opened under the scheme by the first week of January 2015 were operating on “zero balance”. This clearly shows that more than 72 percent of total ‘beneficiaries’ have nothing to save though the government does get the ‘benefit’ of having them to ‘show’ a success that never was.
Furthermore, despite offering life insurance cover to the accounts opened between 15 August 2014 and 26 January 2015, the Information request reveals that the Union Finance Ministry, hadn’t even fixed the insurance premium amount until January 2015. Morover, the Ministry has chosen not to disclose what this amount is in fact. The reasoning give is that disclosing this amount is “not in public interest and commercial interest.”
The scheme, judged by the disbursal of promised insurance cover, is an even bigger failure. In a reply to another Right to Information request, the National Payments Corporation of India has stated that not a single accident claim had been settled till December 2014. The PMJDY came into effect on 1 April 2014; therefore, not one citizen had been helped 8 months into the workings of this game-changing scheme. According to the NPCI, many of the claims were rejected outright and only a tiny fraction of the claims had even made it to the discussion stage. (Further details accessible here). A major reason behind such a dismal rate of settlement is the clause in the scheme that makes performing at least one successful financial or non-financial transaction 45 days prior to an accident mandatory; this feature defeats the very idea of ushering the banking and financial security associated with the scheme to the poor.
What is an insurance cover worth that does not deliver on the ground? Nice sounding words, which look good on paper, but a failure in implementation is what the scheme has amounted to, just like thousands of such schemes since Indian independence. Careful implementation of good ideas is what helps citizens, not well-branded and advertised schemes. Unfortunately, the governments know all the reasons behind the failure but seem to be least bothered to act.
At the implementation level, right from the moneylender-corrupt bureaucracy nexus on the ground, to banks’ reluctance in opening these small accounts, everything has gone against PMJDY. What could have made it work, was the mobilisation of government workers down to the village level to make citizens understand the scheme and its clauses, and to provide feedback on any problems in implementation. Authorities should have had ensured that banks wouldn’t refuse to open accounts on technical grounds. And they should have ensured that the promised time of processing the insurance claim, i.e. 10 days, was honoured.
Perhaps expecting that a system that fails to deliver even basic justice to victims of crime can offer economic rights to the poor is sheer folly. This failure is not one of Mr. Modi’s government alone. It is the inherited system that fails all such schemes. But then, Mr. Modi did arrive riding on a wave of change in governance. And, he promised he would deliver.
