18
S
tate
of
I
ndia
’
s
L
ivelihoods
R
eport
2015
services and safety nets. Indirectly, growth
improves the prospects and the opportuni-
ties and encourages individuals to invest in
their own human capital. The Union Budget
2015–16, on its part, described the fivemajor
challenges facing the country. These are
agricultural incomes under stress, increase
in investment in infrastructure, decline
in manufacturing sector’s performance,
resource crunch at the Centre on account
of higher devolution of tax revenue to states
and maintaining fiscal discipline.
In agriculture, the Budget specifically
aims at focussing on micro irrigation and
setting up corpus of
`
250 billion for Rural
Infrastructure Development Fund (RIDF).
The NREGS has been allocated
`
50 billion
more than the last year. The NREGS was
also restructured (Box 2.2) last year to
focus more on creation of lasting assets that
improve production and productivity.
In the social sector, government is laying
considerable store on the Direct Benefits
Transfer scheme (DBT) that delivers gov-
ernment benefits to the beneficiary’s bank
account directly. As of July 2015, 175 mil-
lion PMJDY accounts have been opened by
banks and savings of more than
`
220 billion
have been mobilised. While 46 per cent of
these accounts carry zero balance, overall
average balance held in these accounts is
around
`
1275. While 10.6 crores of these
accounts are rural, the remaining 6.9 crore
accounts are urban. This places the govern-
ment in a position to directly channel the
benefits to remote rural areas through the
banking system. The Budget 2015–16 and
the
Economic Survey 2014–15
talk about the
JAMtrinity that was the focus of debate in the
press andmedia. The PMJDY bank accounts,
the Aadhar- based authentication processes
and themobile payment systems together are
supposed to provide the impetus for building
a leakage-free-and-speedy payment system
that will enable the government to directly
provide payment benefits to the accounts
of the beneficiaries. While the number of
PMJDY accounts opened and the positive
business environment around the mobile
payment system are encouraging, issues are
in the functionality of bank accounts opened
under the PMJDY. According to the field
information, a number of these accounts
are still not functional. The accounts that
have been opened are more in a compliance
mode to satisfy the programme targets of
the government and the RBI rather than
providing effective services to customers.
These accounts are like cost centres for the
banks and providing even minimum ser-
vices to most of these accounts across the
country will cost the banks significantly. The
appointment of agents to deal with these
accounts through efficient IT platforms is
a potential solution but entails significant
initial investment in both the IT platforms as
well as in an agent’s recruitment and train-
ing. The licensing of 10 entities for operating
small finance banks and 11 entities for pay-
ments banks can be a game changer in chan-
nelling payments and remittance services.
The new class of banks can mobilise savings
(limited amounts in case of payments banks)
and thus offer customers a superior service
value proposition than mainstream banks.
The much awaited small banks licenses will
also lead to increased services to the hitherto
excluded people. A new initiative in risk
mitigation for vulnerable households has
Box 2.2:
Amendment to Schedule I of
the NREG Act
Sixty per cent of the works to be taken up in
districts must be for the creation of produc-
tive assets linked to agriculture and allied
activities. The creation of community assets,
in addition to individual assets, is allowed
for vulnerable communities. The ratio of the
cost of wages and the cost of materials for a
project was to be maintained at 60:40 for all
projects collectively at the block level. At the
block level, for projects not implemented by
the GramPanchayat at this ratio is flexible. At
the district level, the ratio of 60:40 needs to be
maintained for projects not implemented by
the Gram Panchayat.
Source:
Based on the amendment carried out
to the NREG Act.
