New Delhi: To roll out its ambitious JAM trinity plan to directly transfer subsidies to intended beneficiaries and eliminate intermediaries and leakages, the government has started linking the Jan Dhan scheme, Aadhaar numbers and mobile numbers of individuals, finance minister Arun Jaitley said on Friday.

The JAM (short for Jan Dhan-Aadhaar-Mobile) trinity was first proposed in the Economic Survey 2014-15.

Delivering the K.R. Narayanan Memorial Lecture at the Australian National University, Canberra, Jaitley said the database of 1.2 billion bank accounts, when linked with 900 million mobile phones and about 1 billion Aadhaar numbers, would effectively ensure the subsidies reach only those who actually need them.

“So far, our estimates show about 170 billion ( 17,000 crore) of subsidy has been saved on cooking gas alone. Parliament has now approved the bill granting statutory status to Aadhaar which will further accelerate Aadhaar seeding in bank accounts," he said.

Prime Minister Narendra Modi in March said his government plans to extend direct benefit transfer (DBT) to food, kerosene and fertilizers, a day after the Lok Sabha passed the Aadhaar bill that seeks to confer statutory legitimacy to the unique identification project that will serve as a central pillar of the subsidy regime.

Economic Survey 2015-16 pointed out that in rural areas, the level of preparedness for implementation of the JAM trinity for effective delivery of the government’s social security schemes is low. With last-mile financial inclusion lagging, the survey stressed the need for improving the business correspondent (BC) network to ensure that the exclusion risk is satisfactorily addressed.

“Despite huge improvements in financial inclusion due to Jan Dhan, the JAM preparedness indicators suggest there is still some way to go before bank-beneficiary linkages are strong enough to pursue DBT without committing exclusion errors. In that sense, the JAM agenda is currently jammed by the last-mile challenge of getting money from banks into beneficiaries’ hands, especially in rural India," the survey said.

“Jan Dhan’s vision must truly succeed before much of India can JAM," it added.

The survey said the centre can invest in last-mile financial inclusion by further improving BC networks and promoting the spread of mobile money. The recent licensing of new banks will help. It also pitched for increasing the commission rates for business correspondents to ensure they are incentivized to remain active.

S.L. Rao, former chairman of the Institute for Social and Economic Change, said if mobile banking could take off in African countries, India should also be able to implement the JAM trinity.

However, Rao said the thin spread of physical branches may come in the way of withdrawal of money by beneficiaries. “I hope post offices and the newly-licensed payment banks can play a big role towards this end," he added.

Jaitley said the government was also bringing about several reform measures for the promotion of payments through cards and digital means. The cabinet in February approved measures to promote payments through cards and other electronic means to check tax evasion and ease the transition to a cashless economy.

“The goal of the proposed policy changes is to replace the use of cash, either in government transactions or in regular commerce, by providing the necessary incentives to use digital financial transactions over a period of time through policy intervention. These measures will further strengthen our efforts in financial inclusion as it will be ensured that each eligible account holder under the Pradhan Mantri Jan Dhan Yojana is provided access to digital financial services in addition to the RuPay Card," Jaitley said.

In this regard, Jaitley said the government was developing PayGov India, which will be developed as a “single unified portal" across central, state governments and their public sector undertakings for collection purposes.

“Wherever needed, the departments/ministries shall make modifications in the rules and regulations that may have been issued so that appropriate changes are incorporated to allow payments/receipts by using cards/digital means also," he added.

Jaitley said mobile banking will be promoted to leverage the huge infrastructure available at lower cost.

“This will also bring efficiency in payments system and ensure that merchants/consumers can leverage their credit history to access instant, low-cost micro-credit through digital means and create necessary linkages between payments transaction history and credit information," he said.

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