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Financial inclusion gets a boost with 'JAM Trinity'

Gyanendra Keshri, Executive Editor, INCLUSION

Finance Minister Arun Jaitley in front of his North Block office before presenting the General Budget.

The Prime Minister Jan Dhan Yojana has been a resounding success when it comes to providing bank accounts to the people who were out of the financial network. Within 100 days of launch of the scheme over 12.5 crore people have been provided a bank account. However, just opening an account does not solve the problem.   

In its first full budget, Narendra Modi government has decided to make Jan Dhan an integral part of the social security programmes by creating “JAM Trinity”. JAM stands for Jan Dhan, Aadhar and Mobile. These three will be used to transfer of subsidies and the benefits of other social welfare schemes. This will help plug leakages and ensure that the benefits reach to the targeted people.

Presenting the General Budget for fiscal 2015-16, Finance Minister Arun Jaitley announced that the government would create a universal social security system for all Indians, specially the poor and the under-privileged. The bank accounts opened under the Jan Dhan scheme would help in effective implementation of all such social security schemes.

The government proposes to launch a Pradhan Mantri Suraksha Bima Yojana that will provide insurance cover at a nominal cost of Rs 1 per month. Under the scheme, accidental death risk of Rs 2 lakh will be covered for a premium of just Rs 12 per year. An accidental death risk cover of Rs 1 lakh is provided under Jan Dhan scheme. Although, it’s not clear whether this Rs 2 lakh cover will be in addition to the benefits extended under the Jan Dhan scheme, it is a big step forward towards financial inclusion.

Let’s assume that this Rs 2 lakh cover at Rs 12 a year will be in addition to the Rs 1 lakh cover provided under Jan Dhan. It will ensure Rs 3 lakh accidental death insurance cover.

Jaitley has also proposed to introduce a pension scheme. The scheme to be named after former Prime Minister Atal Bihari Vajpayee will provide a defined pension, depending on the contribution, and its period. To encourage people to join this scheme, the Government will contribute 50 per cent of the beneficiaries’ premium limited to Rs 1,000 each year, for five years, in the new accounts opened before 31st December, 2015.

To provide both natural and accidental death risk cover the government has decided to introduce Pradhan Mantri Jeevan Jyoti Bima Yojana. It will provide both natural and accidental death risk of Rs 2 lakhs for a premium of Rs 330 per year. People in the age group of 18 to 50 years can subscribe to this scheme.  

Jaitley said these social security schemes reflect the government’s commitment to utilise the Jan Dhan platform, to ensure that no Indian citizen will have to worry about illness, accidents, or penury in old age. “Being sensitive to the needs of the poor, under-privileged and the disadvantaged, my Government also remains committed to the ongoing welfare schemes for the SCs, STs and Women,” he said.

Another important financial inclusion proposal is the creation of a Senior Citizen Welfare Fund. The Fund will be created using the unclaimed provident funds deposits. According to the Finance Minister, there are unclaimed deposits of about Rs 3,000 crore in the PPF and around Rs 6,000 crore in the EPF corpus. The Fund will be used to subsidise the premiums of vulnerable groups such as old age pensioners, BPL card-holders, small and marginal farmers and others.

(Gyanendra Keshri can be reached at gyanendra@skoch.in)

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