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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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Why JDU & BJP Coalition Will Remain Intact

JDU knows that this 15-16% votes is not enough to help the party and for the BJP too, only the 17% votes of upper castes are not sufficient

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Nitish Kumar with Narendra Modi.
Nitish Kumar with Narendra Modi.

By Sagarneel Sinha

There have been lots of discussions among the political circles that JDU led by Bihar Chief
Minister Nitish Kumar is upset with the BJP and trying to send signals to erst allies — RJD and the Congress. This led to speculations that Nitish may once again join the Grand Alliance (GA) leaving the NDA camp. Already, RJD’s new commander Tejasvi Yadav has clearly stated that Nitish led JDU will not be welcomed in the GA. Despite all the odds, if (suppose) GA partners accommodate Nitish, he wouldn’t be the driving force of the alliance as in 2015. Also, Nitish cannot afford to go alone like in 2014 when his party fetched only 2 seats!

Then which is the correct way for JDU? It is to go with the BJP in the upcoming 2019 polls.
JDU’s advantage in this case is the present situation of the BJP. Currently, the saffron party is not in a strong position as the party would be facing anti-incumbency from a strong RJD led alliance in the state. BJP’s traditional voters are the upper castes who account for 17% of the electorate. This votebank is not enough for the party to help to win elections. The main opposition party — RJD still commands over a larger votebank than BJP. RJD is still a dominant force among the Yadavs and the Muslims who account for 31% of the population. It means BJP has to minus the 31% votes and rely on the rest — 69%. Out of these, 16% are the Mahadalits — a large portion of whom generally hail Nitish Kumar as their leader. Also, there are Kurmis, an OBC group consisting of 4% votes — considered as the supporters of JDU. Nitish Kumar himself is also a Kurmi.

Nitish Kumar Invited to Join NDA by Amit Shah After JDU-BJP Tie-up in Bihar
Nitish Kumar Invited to Join NDA by Amit Shah After JDU-BJP Tie-up in Bihar.

JDU knows that this 15-16% votes is not enough to help the party and for the BJP too, only the 17% votes of upper castes are not sufficient. However, if these votebanks are joined together they form around 31-32%. Plus, to gain the extra votes, both the parties have the option to rely on the personal charisma of Nitish Kumar and Prime Minister Narendra Modi. However, there is a power tussle between the two allies to get a respectable share of seats.

This power tussle is because of a strong BJP which earlier used to be a junior ally. The 2014 Lok Sabha elections changed the political scenario of the state where BJP emerged as the largest party in terms of vote share and seats. JDU knows the reality of a new emerging BJP, though it is pushing hard to gain a respectable share of seats for the Lok Sabha elections. Instead, Nitish Kumar has another option — giving the bigger chunk to the BJP for the Lok Sabha elections and the latter playing the junior partner for the 2020 assembly elections if held timely. Given the current situation in the country, in a crucial state like Bihar, BJP can hardly reject JDU as the later still commands over 15-16% votes — a very crucial votebank for winning maximum seats in the 2019 polls. Importance of JDU can also be explained by BJP president Amit Shah’s visit to Patna to have breakfast and dinner with Nitish Kumar. Though in politics there are no permanent friends or foes, so any perfect prediction is impossible. But given the current situation, JDU and BJP parting their ways seems unlikely as both the parties are in need of each other as already highlighted by Amit Shah that the two allies would fight the Lok Sabha elections together. Smiling face of Nitish Kumar was also an indication that the meetings with Amit Shah were fine.