Economic survey: Govt invokes ‘JAM Trinity’ to counter subsidy jam

The economic survey has hinted at the government’s intention of subsidy overhaul by replacing the present price mechanism with cash transfer into bank accounts, saying it was possible through JAM (Jan Dhan Yojana, Aadhaar, Mobile) Number Trinity.

Updated on: Feb 27, 2015, 23:50:20 IST

Hindustan Times | By Chetan Chauhan, New Delhi

Prefer HTon Google

Share via

Copy link

The economic survey has hinted at the government’s intention of subsidy overhaul by replacing the present price mechanism with cash transfer into bank accounts, saying it was possible through JAM (Jan Dhan Yojana, Aadhaar, Mobile) Number Trinity.

“If the JAM Number Trinity can be seamlessly linked, and all subsidies rolled into one or a few monthly transfers, real progress in terms of direct income support to the poor may finally be possible,” the economic survey said.

It added that phasing out subsidies was neither feasible nor desirable unless a cushion was provided to the poor and vulnerable to achieve their economic aspirations.

In the same vein, the survey described price subsidies as ‘regressive’ as they do not benefit the poor and talked of keeping the fiscal deficit at 3% of the GDP.

It also gave a detailed explanation that the present subsidy on foodgrains and kerosene was leading to huge leakages with figures as high as 41% for kerosene and 54% for wheat.

The state-wise breakup of leakage shows that in Manipur and Nagaland, all the subsidised foodgrain is sold in the black market.

The survey made a strong case for discontinuing the present price-based food subsidy, especially for above poverty line families (APL), on the grounds that the leakages were higher in APL category in case of food distributed to below poverty line families.

Terming cash transfer as an effective way of curbing leakages, the survey lauded the government’s decision to convert all subsidies into direct benefit transfers and said the state capacity to implement the direct transfers to replace subsidies will take time but cautioned against slowing down in this key reform.

Recent experimental evidence documents that unconditional cash transfers — if targeted well — can boost household consumption and asset ownership and reduce food security problems for the ultra-poor, the survey said.

It also provided data on new bank accounts opened under the Jan Dhan Yojana, Aadhaar numbers generated and mobile connections to state effective cash transfer was now possible and should be pushed all the way for economic empowerment of the poor.

Describing JAM Number Trinity (read cash transfer) as Nirvana for the poor, the survey said the poor will be protected and provided for; and many prices in India will be liberated (market driven) to perform their role of efficiently allocating resources in the economy and boosting growth in the long run.

The finance ministry had set June 2015 as the deadline to roll out cash transfer for all entitlements and subsidy in all schemes by when all eligible Indian residents will have a bio-metric based unique identification number called Aadhaar.

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

Stay updated with the latest Business News on Petrol Price, Gold Rate, Silver Rates, Diesel Prices along with Income Tax Calculator