In the thirty months since coming to power, the Narendra Modi government has introduced, re-packaged or re-branded as many as fifty social welfare schemes. In the course of the next thirty months to 2019, the BJP will be hoping for the economic ripples of demonetisation to settle down and for other initiatives to show tangible results. Here’s a mid-term status check on Modi’s big ticket announcements since May 2014.
1. Pradhan Mantri Jan Dhan Yojana
Launched on 28 August 2014, the Pradhan Mantri Jan Dhan Yojana (PMJDY) aims to bring 40 percent of the country which does not have access to financial services, even those under the poverty line, into the banking system.
The initial criticism against the government was that 3/4th of the Jan Dhan accounts, i.e., 5.29 crore out of the 6.99 crore accounts held zero deposits. However, the proportion of zero-deposit accounts declined from 76 percent in September 2014 to 23.27 percent in November 2016.
Notably, the average deposit under the PMJDY increased by 169 percent from Rs 795 in September 2014 to Rs 2,142 in November 2016.
Even the number of accounts quadrupled from 53 million in September 2014 to 255 million in November 2016. This indicates that more Indians are increasingly using their Jan Dhan accounts.
Demonetisation Impact
On paper, demonetisation has given a further impetus to the PMJDY scheme. A Jan Dhan account holder can deposit up to Rs 50,000 after the government demonetised high value currency notes. Media reports claiming a sudden spurt in deposits of Rs 49,000 have alerted the government of possible misuse. Finance Minister Arun Jaitley has said four PSU banks are investigating their branches to determine whether the money belongs to genuine account holders or their associates.
Are the People Benefiting?
But is this scheme, which seems to be a roaring success on paper, actually benefiting those it is intended for?
Besides the larger aim of providing direct cash benefits, the Jan Dhan Yojana also offered an overdraft of Rs 5,000.
But according to data available on the official website on 23 November, of the 255 million accounts, only 2.3 million have availed of overdraft facilities. That’s less than 1 percent of the accounts opened. As per the government’s data, an amount of Rs 315 crore was made available as overdraft to these beneficiaries. That’s an average of Rs 1,369 for every account holder, way less than the promised Rs 5,000.
2. Aadhar Bill
With the concept of direct benefits transfers, the Congress knew “what” needed to be done. The BJP came to power and claimed to have cracked the “how”.
On 16 March, the Aadhar Bill received legislative backing thanks to the Modi government’s strong-arm tactics of pushing it through Parliament as a money bill. Aadhar forms the backbone of the government’s JAM (Jan Dhan, Aadhar and Mobile) scheme to deliver cash benefits.
Plugging the Leakages
Earlier the Centre transferred subsidies and cash benefits to the state which in turn transferred it to the district magistrate who in turn transferred it to the Panchayat and to the local babus for disbursement. There were leakages at every step. The Aadhar Project aimed to put the middleman out of business and to ensure those entitled to the benefits were not at the mercy of some local contractor.
The Aadhar card is a unique identifier as it uses biometrics to ensure ghost identities and duplicates are automatically eliminated. 1.6 crore bogus ration cards were deleted in 2015-2016 resulting in savings of about Rs 10,000 crore, according to the government.
Great in Theory, Does it Work in Practice?
But are Indian banks and other financial institutions, especially in rural areas, even equipped to authenticate the identity of an Aadhar card holder with biometrics?
3G connectivity and efficient data transfers in rural areas is still a distant dream despite Modi’s promise of a ‘Digital India’. Till that happens, Aadhar will not graduate from being just another identity card, to being a unique identifier.
Add to that the fact that the Aadhar card was available for those who did not even have a permanent address proof. All one has to do to get an Aadhar card is get a letter signed from the Sarpanch and file an application. There’s no guarantee that illegal migrants and those not eligible for a card can’t get one.
So, while Aadhar may have helped plug leakages compared to previous years, it will not achieve its ultimate objective of direct cash benefits until it truly becomes a unique identifier.
3. Mahatma Gandhi National Rural Employment Guarantee Act
Speaking in Parliament in February 2015, Prime Minister Modi took a clear shot at the Congress and vowed never to discontinue MNREGA. “It is a proof of your failings,” he said as Sonia Gandhi looked on stoically.
He followed it up with a record budgetary allowance of Rs 38,500 for the Congress’ flagship scheme in 2016-2017.
Announcing the highest ever budget spend for MNREGA was great for optics, but did it benefit those in need?
The scheme seeks to guarantee 100 days of work. But in 2015-2016, it only offered 48.8 days of employment. In its defence, the government said that not all 12.69 crore households come for work for 100 days. But this claim stood exposed by a Business Standard report that revealed how an unofficial WhatsApp group had told states not to generate employment because funds would not be made available.
Incidentally, this “informally placed moratorium on funds” came during a drought year that increased demand for wage-based employment.
4. LPG Subsidy Scheme
LPG subsidy scheme or PAHAL (Pratyaksh Hastantarit Scheme) was launched by the Congress government in 2013, but could not be implemented. It provides LPG cylinders to those who have joined the scheme at subsidised rates. The subsidy amount is directly transferred into the consumer’s bank account.
As per the government’s data, Rs 38,095 crore has been disbursed among 16.93 crore beneficiaries. The implementation of DBT has resulted in 3.5 crore bogus beneficiaries being weeded out of the system, resulting in savings of over Rs 14,000 crore in 2015-2016 alone.
Is LPG Subsidy Helping Poor Households?
1. Convenience
LPG cylinders are home delivered to urban consumers, but in rural areas consumers often have to travel to delivery outlets, often located in the next village.
2. Cost
As per this scheme, BPL families can receive a new LPG connection without having to pay the security deposit for a cylinder and a pressure regulator. But they are required to buy a gas stove and LPG rubber tube at their own cost. If the gas stove has not been bought from the LPG distributor, it will have to be inspected and the inspection charges will have to be borne by the consumer. Additional installation and demonstration charges, and of course, the recurring cost of refilling the LPG cylinder will also have to be paid by the consumer.
3. Not Giving it Up
A study by the Council on Energy, Environment and Water, estimates that about 15 percent of the population account for 25 percent of the LPG consumer base. However, despite the much hyped ‘Give It Up’ campaign, only 3.6 percent of consumers actually gave up their subsidy claim. In other words, only 14 percent of the rich consumers actually ‘gave it up’.
5. Rural Electrification
The Modi government has promised to electrify the remaining 18,452 villages of the 6,00,000-odd villages in the country by March 2017. Live updates of the government’s progress is available on a mobile app and a Web dashboard called GARV.
As of 24 November, out of 18,452 unelectrified villages, 10,981 has been electrified.
Note that a village is classified as “electrified” if public places in the village and 10 percent of its households have access to electricity. This progress is monitored by Gram Vidyut Abhiyantas (GVAs)
Discrepancies in Government Statistics
But several discrepancies in government’s claims have recently been reported.
The Hindu found 342 villages where the status marked by the GVA was ‘e0’, which means un-electrified (‘ee’ and ‘en’ mean electrified). And yet, in the ‘overall’ category, all of these villages have been marked as electrified.
The report also notes that around 300 villages had been declared electrified by the power company even before the GVA visited the village, thereby rendering the entire monitoring system redundant.
6. Make In India
On 15 August 2014, Prime Minister Narendra Modi announced ‘Make in India’. “Come, sell in any country of the world, but manufacture in India,” was his appeal.
What followed were radical changes in India’s Foreign Direct Investment policy that allowed, among other things, 100 percent FDI in defence, civil aviation and pharmaceuticals.
Additionally, the government relaxed the rules for single-brand retail and defence. It also put most sectors on the automatic approval route.
The government’s efforts even helped India move up the ranks in the World Bank’s ease of doing business index.
The Modi government claims that FDI grew by 46 percent to 61.58 billion dollars between May 2014 and October 2016. As per RBI data, India can expect 36 billion dollars through the FDI route at the end of 2016.
Money Promised is not Always Money Earned
RBI data reveals a yearly pattern that shows that there isn’t much difference in the FDI inflow into India during the UPA-2 and the NDA governments. Proposals and announcements mean very little, as one of the big ones, from Foxconn, is yet to see any movement.
Despite the spike in 2016, the government earned Rs 24,748 crore in FDI in 2014-2015, which is only marginally above the Rs 23,473 crore FDI earnings in 2011-2012 when the Congress was in power. A comparison of the FDI inflow between 2012-2014 reveals a similar story.
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