In support of PMJDY

Infusing crucial social and more crucial economical sense into the new financial inclusion scheme


Adve Srinivasa Bhat | December 9, 2014

Note: the purpose of this article is not to dig out flaws in the most noble and desperately needed financial inclusion project launched with intense passion and force by unarguably the most well intended and forceful prime minister of this country – Shri Narendra Modi. The sincere objective is to support it to evolve into a highly effective project in providing money support and livelihood opportunities for the huge lot of uncared for – for so many years, in spite of many similar programs in the past.

A ‘Yojana’ (project) is many, many times larger in size, perspectives and impact compared to a ‘product’ but most yojanas, particularly the populist ones launched by govts in support of the poor fail to make the expected impact (social good) owing to lack of critical elements of  a successful ‘product’ in them. Failure of such ill-structured projects is in fact augmented, quite ironically, by the very promotion efforts run in support but on narrow political interests without strategies or tactic. Eventually the projects drain the resources of the government without accomplishing the social good expected out of them.

Principles of running govts can be hardly different from those that are applied in running businesses because the purpose and objectives of both are not quite different. While the businesses serve the society with products with the hope to maximize, ideally optimize, profits to the shareholders without harming the interests of other stakeholders the govts are expected serve the society in ensuring happiness of its citizens (shareholders) across sections duly providing considered and therefore weighted opportunities for all in progressively evolving the society towards the ideal state.

Businesses serve the society by providing things of needs, wants and wishes to its customers, not necessarily in that order though businesses thrive by that order for obvious reasons. The reason for some of the biggest businesses selling brinjals now! Businesses succeed or fail by the match or lack of it between their products and peoples expectations from them. Businesses also lose heavily by wasting money, often unwisely, in trying to sell (in promotions) beyond the worthiness of the product. Competition keeps the businesses in check which over time evolved the concept of deliberate branding with virtues as marketing strategy – a concept grossly misunderstood by most businesses, and in politics branding – marketing by virtues – is non-existent owing to the absence of it across parties – be it BJP, even AAP and the congress in spite of the absolute rout.

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Govt largely fails with its various projects primarily because of not perceiving them as products that serve the needs of the people and thus expect to fetch the nation a return in terms of settling social imbalances in a certain measure. Policies, rules and plans of the govt across its ministries would stand a good chance of success should those who frame them consider them as products that deliver value to the target set and promote each of them with strategies and tactics in ensuring effectiveness. In the absence of competent professional approach, ‘for-the-poor’ projects of the govts fail owing the narrow interests of the political party or parties in coalition in power driving it in ways to make political capital out of it at the cost of general public obviously hitting the poor harder. The claims of the govt on the accomplishment on PMJDY and the renewed target of 10 cr. now only tells of the failure of such schemes in the past which were also boasted with similar claims. Govt policies and programs for enabling poor such as loan melas, loan waivers and other support and inclusion projects can all be done with greater effectiveness should the govt design and implement them with clinical expertise.

Prime Minister’s Jan Dhan Yonjana (PMJDY) happens to be a typical example of govt’s deficiently structured ‘for-the-poor’ initiatives that eventually fail owing to the missing elements of a ‘worthy product’ and the sense of purposeful ‘marketing’ in their creation and execution. Such programs therefore do always carry the real risk of yielding negative results – sucking up scarce public money wastefully and worse, lots of it into undeserving hands that are known to play around govt projects – at the cost of most deserving.

The purpose of this article is not to dig out flaws in the most noble and desperately needed financial inclusion project launched with intense passion and force by unarguably the most well intended and forceful prime minister of this country – Shri Narendra Modi. The sincere objective is to support it to evolve into a highly effective project in providing money support and livelihood opportunities for the huge lot of uncared for – for so many years, in spite of many similar programs in the past. Therefore, in this article I choose to focus on a critical insight and a simple solution arising out it which, I believe has the potential to considerably offset the project’s many flaws across; - the product, marketing and implementation.

First the insight as illustrated right at the top;

“Success of Prime Minister’s Jan Dhan Yojana depends on those who have bank accounts”

‘Financial inclusion’ is in reality not that hard a task as it is made out to be by successive governments – read; political parties - for drumming up there connect with the poor. In fact it happens to be an evil that was let to grow since ages till even this day by the rampant practice of, well – exclusion. Exclusion of vast sets of people earning low to meager incomes across sectors in businesses largely at the lower end of the supply chain and at the fore end of the delivery chain and innumerable local sundry businesses and also at the level of households in availing cleaning and maintenance services indeed make up the bulk of  - exclusion – incongruously. Millions of such excluded people do their banking with their masters seeking petty advances and trade their services at a disadvantage remaining ever in that trap. In India even very large companies, with exception of a countable few, do not consider it as their responsibility (CSR) to inculcate socially responsible practices across the supply and delivery chains in spite of the considerable clout vested in them. That coupled with govt’s oversight makes a large set of SMEs who are well served by the banks indulge in practices that cause financial exclusion. Most of them pay the salaries and wages in cash and worse some notoriously smart among them compete with banks by keeping the salary of some of the staff, mostly of migrant workers from other states, with them as safe keeping – to be given when they go to their native, of course, with out interest, and worse with deduction by the whim of the proprietor.

The ideal way to achieve a major success in financial inclusion is not by asking millions of excluded people to open bank accounts – but by asking those who avail their services, who for sure have bank accounts to – pay by cheque. The govt obviously is driving up things from the wrong end and thus carry huge risk that is apparently quite real. Beyond this huge genuine set the set that is excluded and being targeted by the govt is in fact not a subject of ‘financial inclusion’. It is called unemployment or unemployability which issue can hardly be fixed by opening bank accounts. That calls for smarter efforts to cause convergence of social initiatives for being effective in alleviating hardened social issues. A bulk of exclusion also happens owing to the inability of the banks to compete with petty money lenders who earn a loot by charging at least ten times more interest than the banks from the sweat of large sets of hard working and honest self employed persons like the vegetable vendors. Not just the govt, even the banks, perceived to be professionally run seem to lack the ability to develop products in spite of very obvious needs. The problem is one of misplaced focus, with both.

In making the all important Jan Dhan Yojana accomplish the desired objectives govt needs to use the stick for SMEs and seek the support of vast sets of affluent class by tickling their sense of individual social responsibility.

In getting the innumerable SMEs and small business owners to pay by cheque to (also) those who are excluded from the banking system and thus from the badly needed and also feasible bank loans – the govt has to find a way to insist them to obey.

And in getting millions of self employed persons providing services to the households as servants, particularly maid servants, to avail banking services govt need only tap into the intrinsic sense of individual social responsibility in most people which can make them not just willingly pay in cheque to their servants but also mentor them to cultivate financial discipline. In fact, most individuals, not necessarily the affluent do nurture altruistic wish to help honest and hardworking persons to settle in suitable occupation – be it selling vegetables or anything or even setting up a small shop. For sure there are thousands of cases of noble individuals helping as many and more struggling individuals to achieve financial security.

The idea, intent and even the practice exist and the govt should work with fit approach in enlarging such practices which makes this task of enabling financial inclusion feasible easily. More importantly, it will drive away the whole lot of crooks who would have already weaved themselves into the project should the govt insist on a mentor of certain character for availing the overdraft proposed. Financially excluded people don’t come from Mars. They are directly connected to quite a few well heeled who can help by mentoring.

A project of the complexity of PMJDY can hardly succeed without active participation of businesses and general public. Interestingly, our management institutes would find it hard to find an active case as hard and therefore as useful as PMJDY for working with the students in learning the elements of product and marketing imperatives in creating successful products.



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