Silvia Masiero discusses the usage of the JAM trinity (Jan Dhan Yojana, Aadhaar, and mobile platforms) in the prospected move from existing anti-poverty programmes to a system based on cash transfers

Masiero, Silvia

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2015-5-18Jan Dhan Yojana, Aadhaar, mobile platforms: An anti-poverty system in peril?blogs.lse.ac.uk /southasia/2015/05/18/jan-dhan-yojana-aadhaar-mobile-platforms-an-anti-poverty-system-in-peril/Silvia Masiero discusses the usage of the JAM trinity (Jan Dhan Yojana, Aadhaar, and mobile platforms) inthe prospected move from existing anti-poverty programmes to a system based on cash transfers.With the advent of information technology in the public sector, embraced by many stategovernments in India, relations between e-governance and anti-poverty policy have become amatter of scholarly interest. In a previous blog post, I have outlined the links betweencomputerisation of the Public Distribution System (PDS), the main Indian food security net, and itsprospected substitution with a system based on direct transfer of benefits. Technology can beinstrumental in reforming anti-poverty schemes, and the reforms presently discussed by the NDA government areindeed being integrated with a novel information infrastructure.The view of centralised anti-poverty programmes as suboptimal, as compared to more flexible and targeted socialsafety nets, has already found expression in contemporary India. The policy shift to a targeted PDS in 1997 is acase in point, in which leakage to the non-poor was addressed by making subsidies conditional to poverty status.Nonetheless, high leakage rates have persisted in the PDS, largely due to illegal diversion of subsidised goods tothe market: as the Shanta Kumar Committee Report highlighted, leakage rates are high enough to recommend ashift to a cash transfers policy. A similar line of thought has been expressed on the Mahatma Gandhi National RuralEmployment Guarantee Act (MNREGA), by economists who argued in favour of downsizing this anti-povertyscheme to prepare its substitution with direct transfers.The use of IT infrastructures to enact a policy shift to cash transfers was, however, not fully articulated before theinception of NDA’s term in office. In a recent Government of India report, a clear vision on how to “wipe every tearfrom every eye” is detailed: a composite digital infrastructure, referred to as the “JAM trinity” – an acronym for JanDhan Yojana, Aadhaar, and mobile platforms – has been established to devise a new anti-poverty system, based ondirect transfers rather than heavy bureaucracies. The JAM trinity consists of three components:The Pradhan Mantri Jan Dhan Yojana, launched by the Ministry of Finance in August 2014, is a financialinclusion scheme aimed at providing each household with a bank account, with the option of opening zero-balance accounts too. Bank accounts will serve as the backbone infrastructure to allow transfer of benefits tothose entitled.Aadhaar, a flagship scheme of the previous INC government, is a project aimed at unique identification ofcitizens, through a 12-digit number and registration of biometric details. While the Supreme Court of India hasforbidden to make it mandatory for social safety schemes, Aadhaar is still an option to ensure targeting ofbenefits: it uses biometrics to maximise accuracy of identification, and minimises access by non-entitledusers.Finally, mobile platforms are pliable to many uses in social safety nets. In particular, when benefits arereceived, mobile notifications empower users to claim and collect their cash. Several mobile-based schemesare already into place as pilot projects around the nation.Hence, as of its composite structure, the JAM trinity has been devised to carry a clear policy of decentralisation.This is aimed at dismantling heavy bureaucracies, on which leakage and ineffectiveness are often blamed, andshifting to effective direct transfers of benefits to the poor.1/3Aadhaar enrollment. Image credit: Sonali CampionHow viable is this radical, market-oriented policy decision? A caveat relates, in the first place, to the potentially tooprompt lumping of IT infrastructures with deconstruction of bureaucracies. E-governance measures embody policydecisions, and can even, for that matter, be used to oppose marketization: to cite an example above all, that is thecase of Karnataka, whose use of biometrics has been oriented to strengthening the PDS rather than dismantling it.The Karnataka system, which I have reviewed on this blog, is far from perfect: its experience proves, however, thatit is possible to use IT systems to enact PDS reform, and attain poverty reduction by that. Hence, a better PDS canbe pursued through computerisation, rather than in spite of it.Furthermore, the desirability of a shift to cash transfers – as reflected in today’s debate – is seriously questionable,especially in the light of proven correlation between improvements in the PDS and reduction of state-level poverty.Three considerations are paramount here. First, market incentives may be suboptimal in catering to vulnerablegroups, for which equality of access (rather than flexibility) is the main value. Bureaucracies can be prone toleakage, but their structures are oriented to fairness, and to the defence of impartiality in the distribution of benefits.The same cannot be said of cash transfer systems, which expose the poor to price volatility and the fluctuationsinherent in the market.Second, when investigating the matter with recipients, a problem of material feasibility emerges: detachment frombanking systems, in spite of the inception of Jan Dhan Yojana, is experienced by beneficiaries whose closest bankoffice is many miles away, and whose familiarity with a system relying on banking correspondents is minimum.Finally, dismantling the PDS today means ignoring too many state-level stories, showing the power of policyimprovement in delivering actual reduction of poverty indices.The JAM trinity – as any piece of technology for development – is not per se optimal or suboptimal, but can be usedwith varying degrees of adequacy. Arguments in favour of lean structures, proposing to tackle leakage by attackingits bureaucratic foundations, may have a logic in the public sector, following the orthodoxy of minimal-stateprinciples. But the use of IT as a means to dismantling existing anti-poverty nets, in favour of cash transfers, runsthe risk of overlooking the security of access to entitlements, which should instead be at the core of social safetysystems.Note:  This article gives the views of the author, and not the position of the India at LSE blog, nor of the LondonSchool of Economics. Please read ourcomments policy before posting. About the Author2/3Silvia Masiero recently completed her PhD in Information Systems at LSE and is now a TeachingFellow in LSE’s Department of International Development. She tweets @SilviaHedley.You can view previous posts by Silvia here.Copyright © 2016 London School of Economics3/3

Jan Dhan Yojana, Aadhaar, mobile platforms: an anti-poverty system in peril?

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