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Striking positive notes

In a bid to recalibrate its image, the Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, held the first of its 200 rallies on Monday to celebrate the party’s one-year in office. The recalibration, some argue, was forced upon the BJP after the Congress and other opposition parties went on the offensive for not paying attention to the common man’s grievances. This was strategically timed by the opposition while the prime minister went on his globe-trotting mission seeking much needed foreign investments. Such attacks, however, are misplaced at best. Under the Pradhan Mantri Jan-Dhan Yojana (PMJDY), the Indian banking industry opened about 150 million new bank accounts. 

The PMJDY is undoubtedly the most ambitious financial inclusion programme that any government has ever attempted in any part of the world. The Centre has also embarked upon the use of Jan Dhan, Aadhar and Mobile (JAM), a unique combination of three, to implement a direct transfer of basic benefits. This innovative methodology will allow the transfer of benefits in a hopefully leakage-proof, well-targeted and cashless manner. In addition to the above programmes, the Modi government also launched three brand new social security schemes.

The first scheme will offer a renewable life insurance over of Rs 2 lakh to all savings bank account holders in the age group of 18-50, covering death due to any causes, for a premium of Rs 330 per annum. The second scheme will over a renewable one-year accidental death-cum-disability cover of Rs 2 lakh for partial/permanent disability to all savings bank account holders in the age group of 18-70 years for a premium of Rs 12 per annum per person. Finally, in a bid to reach out to workers in the unorganized sectors, the government issued a pension scheme starting at the age of 60 years.

It would, however, be slightly biased to shower only bouquets and praises for these schemes, considering that they present a seemingly intractable set of problems that the government has not yet resolved. Similar to the previous United Progressive Alliance led government’s attempt at greater financial inclusion, the PMJDY suffers from the fact that most bank accounts remain dormant as customers hardly keep any money there. According to a study by the World Bank, around 72 percent of these accounts show zero balances. Although bank account penetration in India has increased from 35 percent to 53 percent between 2011 and 2014, a majority of them remain dormant. Even its insurance schemes, some argue, are not uniquely innovative by any stretch, with many similar variants launched by previous governments. Unlike the previous government, however, the BJP-led Centre has tried to inculcate smart ways of achieving its objective of financial inclusion. In terms of final outcomes, it continues to suffer from certain anomalies. The Centre has, nonetheless, encouragingly moved forward on its objectives.

Despite scathing criticism from left-leaning political outfits, the Centre has remained conservative in raising the minimum support price (MSP) for foodgrains and other populist measures like Rs 70,000 crore farm loan waiver. The MSP, many economists argue, does not take into account rising input prices, besides adding to inflationary pressure. In matters of finance, however, the Centre continues to struggle with the deep malaise of bad loans that has afflicted our porous banking sector. However, what it has done, unlike governments in the past, is not interfere into the workings of public sector banks. It has only been one year for the Modi government. Despite the many positive steps it has taken, the government is yet to arrive at significant implementation strategies that would dictate better final outcomes. 
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