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Narendra Modi’s Financial dream,progress Slows down

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By Himadri Ghosh

“Never before in economic history would 15 million bank accounts have been opened on a single day. Never before has the Government of organized a program of such scale,” Prime Minister Modi said on August 28, 2014, launching the Pradhan Mantri Jan Dhan Yojana (Prime Minister’s People’s Wealth Programme/PMJDY).Seventeen months later, in January 2016, the scheme reached all Indian households, according to official data, bringing 200 million additional families to the banking system.

But the primary goal, direct transfer of government subsidies to people, has not overcome two challenges: linking the unique identification (Aadhaar) card to PMJDY; and getting beneficiaries to use the bank account. The speed of adding accounts, as IndiaSpend reported earlier, was outpacing the delivery of benefits, and Reserve (RBI) governor Raghuram Rajan, in 2014, cautioned banks against focussing on numbers alone.

Less than half the 210 million Jan Dhan accounts were seeded with Aadhaar as of January 31, 2016, the data indicates. More than 30 percent of these accounts have been at “zero balance”, meaning the account holder was not using the account.

States struggling to link Aadhaar to PMJDY include Andhra Pradesh, Chhattisgarh, Jharkhand Karnataka, Kerala and Maharashtra. These states together linked less than 40 percent accounts to Aadhaar.

It is important that these states fall in line, as subsidies on cooking fuel, auto fuel and food grain impose a multibillion-rupee subsidy burden, the government has said.

The government is estimated to have spent Rs.266,700 crore ($45 billion) on subsidies in 2015, of which Rs.122,700 crore ($20 billion) was spent on food, Rs.71,000 crore ($12 billion) on fertilizer and Rs.60,300 crore ($9 billion) on oil.

Up to half of these subsidies are misappropriated, according to various estimates.

“One of the biggest reforms that India has embarked upon is moving to a market-pricing mechanism across a variety of products such as cooking fuels, auto fuels, food grains and fertilizers,” a Kotak strategy report said.

‘A policy does not work by itself?people must know how to use it’

“It takes time to properly implement policies in India, more so for financial schemes like PMJDY as a lot of people are unaware of words like bank, loan, subsidy,” said Santosh Kumar, professor of public policy and administration at FLAME University, Pune.

The integration of PMJDY, Aadhaar and Mobile (JAM) could be an important component of structural reforms. The idea of JAM, as propounded in the 2015 Economic Survey and the union budget, was to identify the beneficiary and deposit subsidies directly into his/her bank account.

“A policy does not work by itself,” said Kumar. “The government must have a strong political will to implement the policy properly by scrubbing it of discrepancies.”

“There are two aspects to financial inclusion: one is bank accounts and the second is access to credit. The scheme announced by the prime minister addresses the first problem. The issue of making credit available to small borrowers remains,” wrote C. Rangarajan, former chairman of the Economic Advisory Council to the prime minister, in The Hindu.

An article published by RBI in May 2013 revealed that more than 42 percent of rural credit is sourced from non-institutional agencies. “Rural credit markets in India is characterized by the coexistence of both formal and informal sources of finance and the market is fragmented,” RBI concluded after four rounds of survey.

“The scheme is a step forward but a lot needs to be done before calling it successful,” said Anindita Roy Saha, associate professor of economics at Delhi University. “People from rural and urban areas need to be treated separately. For achieving the objectives, people should be educated about the financial system.”

The United Progressive Alliance (UPA) government had opened nearly 60 million so-called no-frills accounts, but RBI data have shown that more than half of them remained dormant.

“The basic idea of financial inclusion is to include most of the vulnerable sections of society in the banking system,” said Kumar. “People need to know the potential of the scheme and the documents they have in possession; otherwise, they can’t exercise their rights.” (IANS/indiaspend.org)

 

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India Begins Its Election Season With Five States

The BJP has sent top leaders to campaign in Chhattisgarh.

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India, elections, vietnam
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India began on Monday the first of five state elections to be held in coming weeks, important tests for Prime Minister Narendra Modi as he plots a course that he hopes will ensure him victory in a general election due by May.

Voters in the central state of Chhattisgarh went to the polls on Monday to elect representatives for 18 of the state assembly’s 90 seats in a staggered poll complicated by logistical problems and left-wing guerrillas.

The state of about 26 million people has been ruled by Modi’s Bharatiya Janata Party (BJP) since 2003, and he will be hoping to hold on to power.

India, elections
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“Some unholy people have handed guns to children who should have pens in their hands,” Modi told a rally in the state on Friday, referring to the rag-tag guerrillas battling government forces from forest hideouts. “They’ve finished the lives of our tribal children.”

Hundreds of election workers had to be flown in to remote polling stations by helicopter because of the danger posed by the rebels.

Modi called for voters to back his BJP and its vision of “development for all.”

The final phase of voting in Chhattisgarh, which is known for its coal, iron ore and bauxite reserves, will be on Nov. 20.

India,India, elections
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The BJP was the preference of about 43 percent of voters in Chhattisgarh, 7 percentage points ahead of the main opposition Congress party, according to a survey released last week by the Lokniti-Centre for the Study of Developing Societies.

Modi’s other big tests will be in the neighboring central state of Madhya Pradesh, where the BJP is slightly ahead of Congress, according to polls, and in the northwestern state of Rajasthan, where Congress is expected to emerge victorious.

A good performance by the BJP in the elections would help it deflect growing criticism over unemployment and a crisis in the countryside over falling farm prices and wages.

India, elections
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Elections will also be held for assemblies in Telangana in the south and Mizoram in the northeast.

The BJP has sent top leaders to campaign in Chhattisgarh, including Yogi Adityanath, a firebrand Hindu priest and the BJP chief minister in Uttar Pradesh state.

Also Read: PM Narendra Modi Announces Easier Access to Credit

Adityanath has been appealing to the BJP’s Hindu-nationalist base and on Sunday accused the opposition of blocking construction of a temple for Hindu god Ram on a disputed site in Uttar Pradesh.

The destruction of a mosque on the site by a Hindu mob in 1992 sparked deadly riots across the country. (VOA)