Wednesday, March 20, 2019

How Jan Dhan Yojana is leading to Lower Inflation and Lesser Alcoholism in India

By October, 2017 300 million bank accounts have been opened in Rural areas with balances totalling USD 10 billion or Rs 67 billion!  This financiaL inclusion scheme launched on 28th August, 2014 is the most unique thing ever done in any country.  That it has its critics shows the paucity of basic common sense in the Indian opposition and high prevalence of prejudices which trump what is good for the country.  By February 2017, 20 million new accounts had opened after the demonetization announcement in October 2017.

How #JanDhan Yojana is leading to Lower Inflation and Lesser Alcoholism in India #JAM Click To Tweet

Actually, 75% of the accounts are in just 10 states.  UP with 47 million, Bihar with 32 million, and West Bengal 29 million.  60% of all the accounts under Jan Dhan have been opened in rural areas.

Jan DhanBasically, what is known as JAM – the trinity of Jan Dhan-Aadhaar-Mobile has brought about a revolution in the rural areas.

Because of formalization of the economy, inflation in states where more Jan Dhan accounts have been opened – has significantly in statistical terms, come down.  Where experts had predicted an increase in inflation, the opposite seems to have happened!  The Consumer Price Index (CPI) is 3.28% in September 2017, compared to 4.39% in September 2016!


Not just this, there is another side effect of the increase in Jan Dhan accounts – people have become sober and reduced drinking and use of alcohol.  State Bank of India’s Economic Research Wing has found that this drop in use of intoxicants is both “statistically significant and economically meaningful”!

Also since October 2016, there has been a significant increase in household medical expenditure specifically in Bihar, West Bengal , Maharashtra and Rajasthan.

Impact of Jan Dhan Accounts
Impact of Jan Dhan Accounts

These days there are multinationals which are planning to use the JAM trinity to structure their offerings and businesses in India.  DellEMC is one such business.

“We have invested heavily in India with sales and marketing operations but also in research and development. They are doing research and development on server, storage and software products. India is a strategic market for us.” Dell EMC’s India operations is looking to capitalise on the JAM (Jan Dhan-Aadhaar-Mobile) initiatives of the government to strengthen its position in the domestic market and increase market share.

Dell is estimating the market from the JAM trinity itself be around $26 billion!

American data storage company Dell EMC sees a $26 billion addressable market opportunity in India for hardware, software, services and consultancy products, as it looks to expand market share in the country.

Things are achanging!

Revolutions happen – quietly

The innovative and the crazy targets of issuing bank accounts to the rural and poor was considered stupid by many.  In fact, in the early days these accounts did not have much money balances in t