A Critical Review of Progress of Prdhaan Mantri Jan Dhan Yojnaa … · A Critical Review of...

www.indiastat.com December, 2015 - January, 2016 1 socio - economic voices

A Critical Review of Progress of Prdhaan Mantri Jan Dhan Yojnaa (PMJDY) : State Level Variation

(Yogesh Kumar, Joint Director, Institute of Applied Manpower Research, Planning Commission, Govt of India) In his first Independence Speech Prime Minister of India announced the National Mission on Financial Inclusion titled Pradhan Mantri Jan Dhan Yojna (PMJDY). Under the Jan Dhan Yojna anyone who is India citizen above age of 10 years and does not have a bank account,

can open the account with zero balance. Account can be opened in any bank branch or Business Correspondent

(Bank Mitr) outlet, specially designed for the purpose of opening the accounts under this scheme. The scheme also

provides facility of accidental insurance cover up to rupees one lac without any charge for the account holder.

The account holders under the jan dhan yojana will be given a RuPay debit card which can be used at all ATMs for

cash withdrawal and at most of the retail outlets for making transaction for purchases.

Salient features of the scheme

All households across the country - both rural and urban are to be covered under the scheme. Bank accounts will be opened for 15 crore poor persons.

All bank accounts opened under the scheme are to have an overdraft facility of Rs 5,000 for Aadhar-linked accounts after satisfactory operation in the account for 6 months.

Issuance of RuPay Debit Card with inbuilt Rs 1 lakh personal accident insurance cover provided by HDFC Ergo and a life cover of Rs 30,000 provided by LIC

A minimum monthly remuneration of Rs 5,000 to business correspondents who will provide the last link between the account holders and the bank.

Implementation of the scheme

The mission will be implemented in two phases, the details of which are as follows.

Phase I - 15 August 2014 - 14 August 2015

Universal access to banking facilities for all households across the country through a bank branch or a fixed point Business Correspondent (BC) within a reasonable distance.

To cover all households with atleast one basic banking account with RuPay Debit Card with inbuilt Rs 1 lakh accident insurance cover.

Financial literacy programme to be taken to the village level. Expansion of Direct Benefit Transfer under various government schemes through bank accounts of the

beneficiaries. Issuance of Kisan Credit Card is also proposed

Phase II - 15 August 2015 - 14 August 2018

Providing micro-insurance to the people. Unorganised sector pension schemes like Swavalamban through the Business Correspondents.


Benefits of Pradhan Mantri Jan Dhan Yojana PMJDY scheme is planning on revolutionizing the traditional banking system in India by providing the banking

opportunity and insurance coverage to all including the poor. The purpose of this scheme will definitely benefit the

overall economy of the country and the scheme provides some lucrative benefits which should certainly be availed

and considered. Here is listed some important benefits of the Pradhan Mantri Jan Dhan Yojna (PMJDY) scheme

1. Life insurance under Pradhan Mantri Jan Dhan Yojana

Under the PMJDY scheme the account holders will be given worth Rs.30000 insurance coverage if they

comply with certain specification of the scheme which includes opening an account by January 26, 2015

and having an accidental insurance coverage of over Rs. 200000.

2. Loan benefits under Pradhan Mantri Jan Dhan Yojana

The account holder can take loan benefit of up to Rs.5000 from the bank after six months from opening the

account. Though the amount might seem insignificant for many but we have to realize the scheme is

directed mostly towards people below the poverty line and who are struggling desperately to sustain their

everyday living.

3. Mobile banking facilities under Pradhan Mantri Jan Dhan Yojana

Though the technology of using smart phones to conduct our bank transactions is not novel anymore but

the PMJDY scheme will allow its account holders to avail the same facilities of checking balance and

transferring funds through a normal cell phone which is more affordable to the general economy.

Pradhan Mantri Jan - Dhan Yojana Accounts Opened As on 09.09.2015

(All Figures in Crores)

S.No

No Of Accounts No Of Rupay Debit Cards

Balance In Accounts (In Rupees

Crores)

% of Zero Balance Accounts Rural Urban Total

1 Public Sector Bank 7.82 6.39 14.22 12.88 18626.71 42.90 2 Rural Regional Bank 2.78 0.47 3.26 2.40 3956.66 44.17 3 Private Banks 0.42 0.28 0.71 0.63 1116.47 42.25

Total 11.03 7.15 18.18 15.91 23699.84 43.12


Important questions

1. Population Covered under PMJDY: Where do individual states stand?

2. Inequality of coverage:

Percentage of population in the states vs Percentage of Accounts: Gini Coefficients

Range Analysis : Inter –states variations (deprivation) analysis : indicating efficiency of banking- mechanisms

3. How far the inclusive perspective of the Scheme been successful in terms of

Coverage of rural populace in the country

Coverage of people below poverty lines

Percentage of population covered under the Scheme of PMJDY varies from state to state.

Percentage of population covered

Names of states

Up to 10 per cent Kerala 10-15 per cent Goa, , Himachal Pradesh, Jammu and Kashmir, and Tamil Nadu 15-25 per cent Andhra Pradesh, Assam, Bihar, Gujarat, Jharkhand, Karnataka, Maharashtra,

Odisha, Punjab, Uttar Pradesh, Uttarakhand, and West Bengal 25-35 per cent Haryana, Madhya Pradesh, and Rajasthan 35-45 per cent Chhattisgarh More than 45 percent All India 20.94 per cent population covered

Source : Computed from : http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf

http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf


States as arranged in terms of Population percent living in State vs PMJDY Accounts share in the State

Major State percent of Population in the State

Percent of Accounts in the states

Percent Accounts - Gap Percent Pop

Andhra Pradesh 7.00 7.96 0.96 Assam 2.58 2.78 0.21 Bihar 8.58 7.01 -1.56 Chhattisgarh 2.11 4.34 2.23 Goa 0.12 0.06 -0.06 Gujarat 4.99 4.04 -0.95 Haryana 2.09 2.71 0.61 Himachal Pradesh 0.57 0.35 -0.21 Jammu and Kashmir 1.04 0.74 -0.30 Jharkhand 2.72 2.32 -0.40 Karnataka 5.05 4.65 -0.41 Kerala 2.76 1.29 -1.47 Madhya Pradesh 6.00 9.19 3.19 Maharashtra 9.29 7.08 -2.21 Odisha(Orissa) 3.47 3.42 -0.05 Punjab 2.29 2.46 0.17 Rajasthan 5.67 7.49 1.82 Tamil Nadu 5.96 4.16 -1.80 Uttar Pradesh 16.49 15.71 -0.78 Uttrakhand 0.84 0.85 0.01 West Bengal 7.55 8.06 0.51

* Includes also of Telengana Source : Computed from : http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf

Wide positive difference between the percentage share of accounts under the scheme from percentage share of

population of the States (depicted above) indicate Madhya Pradesh, Chhattisgarh and Rajasthan seem to have

taken a lead in adopting the scheme. On the other hand, the states of Maharashtra, Tamil Nadu, Bihar followed by

Kerala seem to be lagging behind in terms of coverage of population as the negative directed bar chart in the graph

indicates.

Haryana, Andhra Pradesh and West Bengal too indicate a positive difference, depicting a more than average

performance, while States of Gujarat, and Uttar Pradesh exhibit less than average negative. All other states do not differ much from zero, indicating that percentage share of accounts opened in those states

are almost equivalent to the States’ share of population.



Lorenz Curve1 Taking clue from above graph, it is attempted to draw a kind of Lorenz curve comparing cumulative total of States’ Population vs. Accounts under PMJDY coverage while States are arranged in increasing order of percent population. A graphical representation of distribution representing the inequality among the population distribution as also the distribution of accounts could indicate the variation between the states, i.e. greater is the distance between two graphs more is the inter-state variations.

As both the indicators indicate close proximity with small deviations, it warrants a deeper examination state-wise.

As such it is also attempted to do a range analysis using the UNDP methodology comparing states population

coverage under scheme with highest level of coverage of population in any state. While the actual differential of the

state is numerator, denominator is maximum differential between two states.

Gini Ratio The Gini coefficient (or Gini ratio) is a summary statistic of the Lorenz curve and a measure of inequality in a

population. The Gini coefficient is most easily calculated from unordered size data as the "relative mean

difference," i.e., the mean of the difference between every possible pair of individuals, divided by the mean size ,

(Dixon et al. 1987, Damgaard and Weiner 2000). Alternatively, if the data is ordered by increasing size of

individuals, is given by

1 The Lorenz curve is a function of the cumulative proportion of ordered individuals mapped onto the corresponding cumulative proportion of their size. Given a sample of ordered individuals with the size of individual and , then the sample Lorenz curve is the polygon joining the points

, where , 1, 2, ... , , and . Alternatively, the Lorenz curve can be expressed as


(Dixon et al. 1988, Damgaard and Weiner 2000), correcting the typographical error in the denominator given in the original paper (Dixon et al. 1987). Gini Coefiicient Values comes out to be

1. Gini For Accounts differential from Line of Equality = 0.148352

2. Gini For Population Differential from Line of Equality = 0.125111

The Net Differential in two Gini ratios is just 0.023241. This net differential of 2 per cent or so is unable to capture inter-state variations, as also making judgments with respect to relative performance differential Range Analysis: Another way of analysis as attempted by the UNDP comparing the states and their relative diiferentials from maximum and minimum attained amongst the States: The UNDP has developed a set of composite indices such as human development index (HDI), Human Poverty Index (HPI) and Gender related Development Index (GDI) for measuring the level of development and disparities among the countries in the world. Formula hence is

Ax = (Actual Value)x – (Minimum Value)x Bx= (Maximum Value)x – (Minimum Value)x Rx= Ax/Bx

Rx is the Range value of the State

Level of Deprivation State/Union

Territory

Percent of pop covered by PMJDY Range Analysis

4 Andhra Pradesh 23.81 0.58 4 Assam 22.62 0.61 5 Bihar 17.12 0.78 1 Chhattisgarh 43.08 0.00 7 Goa 10.28 0.99 5 Gujarat 16.96 0.78 3 Haryana 27.04 0.48 7 Himachal Pradesh 13.04 0.90 6 Jammu & Kashmir 14.92 0.85 5 Jharkhand 17.85 0.76 5 Karnataka 19.25 0.72 8 Kerala 9.79 1.00 2 Madhya Pradesh 32.08 0.33 6 Maharashtra 15.96 0.81 4 Odisha(Orissa) 20.64 0.67 4 Punjab 22.48 0.62 3 Rajasthan 27.64 0.46 6 Tamil Nadu 14.62 0.85 5 Uttar Pradesh 19.94 0.70 4 Uttrakhand 21.23 0.66 4 West Bengal 22.36 0.62




Difference is maximum in case of Kerala which means the percentage of population covered is minimum in the state. Next in terms of low coverage is Goa and Himachal Pradesh (relative deprivation level 7) followed by Tamil Nadu, Maharashtra, and J & K. (10-12 per cent coverage, and relative deprivation level 6). Relative deprivation level is 5 for Gujarat, Uttar Pradesh, Karnataka, Jharkhand, and Bihar. Andhra Pradesh, West Bengal, Assam, Punjab, Odisha and Uttarakhand have deprivation score of 4 performing better than the earlier discussed states. A much better coverage of population is found in Haryana and Rajasthan, while Madhya Pradesh has second highest coverage of population under the scheme. The best coverage with almost a third population covered vide the scheme is found in Chhattisgarh. Inclusive Growth As the scheme envisages to cater to the principle of inclusive growth covering hitherto uncovered sections of populace to be brought under the banking/saving and rightful coverage of unprotected segments, an attempt is made to look into

(i) Rural as against urban populace (a) Percentage of Rural Accounts : Inter State Variations (b) Percent Rural vs. Percent Urban Accounts

Sl No State Rural Accounts Percentage

Urban Accounts Percentage

Rural Accounts percent- Urban

Accounts Percent 1 AP 29.39 70.61 -41.23 2 Assam 20.53 79.47 -58.94 3 Bihar 22.13 77.87 -55.74 4 Chattisgarh 24.83 75.17 -50.34 5 Goa 20.39 79.61 -59.22 6 Gujarat 31.82 68.18 -36.36 7 Haryana 29.76 70.24 -40.48 8 Himachal Pradesh 10.83 89.17 -78.34 9 Jammu and Kashmir 13.10 86.90 -73.80

10 Jharkhand 22.95 77.05 -54.11 11 Karnataka 27.98 72.02 -44.04 12 Kerala 31.70 68.30 -36.59 13 Madhya Pradesh 33.37 66.63 -33.26 14 Maharashtra 34.52 65.48 -30.96 15 Odisha(Orissa) 20.25 79.75 -59.50 16 Punjab 28.70 71.30 -42.60 17 Rajasthan 26.60 73.40 -46.79 18 Tamil Nadu 31.28 68.72 -37.44 19 Uttar Pradesh 28.48 71.52 -43.05 20 Uttrakhand 23.94 76.06 -52.13 21 West Bengal 24.63 75.37 -50.74 22 Total 28.23 71.77 -43.54

Source : Computed from : http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf There is a large urban bias in the accounts opened so far, and hence the differential between rural and urban

accounts range between (-) 31 and (-) 73 per cent. This is so despite in most of the states more than 50 per cent

population live in rural areas



(c) Hardly a fourth of the accounts opened under the Scheme are rural accounts (25.58 per cent). Almost three-fourth accounts opened are in urban areas

Sl No

States

Rural Accounts

percent

Rural Population

Per Cent

Rank as per Rural

Accounts percent

Rank as per Rural

Population Percent

1 AP+ 29.39 66.51 7 13 2 Assam 20.53 85.92 17 3 3 Bihar 22.13 88.70 16 2 4 Chattisgarh 24.83 76.76 12 6 5 Goa 20.39 37.83 18 21 6 Gujarat 31.82 57.42 3 17 7 Haryana 29.76 65.21 6 14 8 Himachal Pradesh 10.83 89.96 21 1

9 Jammu and Kashmir 13.10 72.79

20 9

10 Jharkhand 22.95 75.95 15 7 11 Karnataka 27.98 61.43 10 16 12 Kerala 31.70 52.28 4 19 13 Madhya Pradesh 33.37 72.37 2 10 14 Maharashtra 34.52 54.77 1 18 15 Odisha(Orissa) 20.25 83.32 19 4 16 Punjab 28.70 62.51 8 15 17 Rajasthan 26.60 75.11 11 8 18 Tamil Nadu 31.28 51.55 5 20 19 Uttar Pradesh 28.48 77.72 9 5 20 Uttrakhand 23.94 69.45 14 11 21 West Bengal 24.63 68.11 13 12


Suppose we have a set of objects, which are being considered in relation to two properties, represented by and

, forming the sets of values and . To any pair of individuals, say the -th and the -th we assign a -score, denoted by , and a -score, denoted by . The only requirement made to this functions is anti-symmetry, so and . Then the generalised correlation coefficient is defined by



The Spearman correlation coefficient is defined as the Pearson correlation coefficient between the ranked variables. For a sample of size n, the n raw scores are converted to ranks , and ρ is computed from:

where , is the difference between ranks. See the example below. Identical values (rank ties or value duplicates) are assigned a rank equal to the average of their positions in the ascending order of the values.

With found, add them to find ∑ The value of n is 21. These values can now be substituted back

into the equation : to give

ρ = = −0.6013 . with a P-value = 1.00 (using the t distribution)

(d) Relationships between percent rural population and percent rural accounts

per cent rural population , and percent rural accounts Remarks r t -test Tailed Type -0.44320062 2.67915E-08 2 1

A negative relationship indicates lots of efforts needed to bridge the gaps between the aims of the schemes, and its

implementation in different states, particularly in rural areas. This clearly means states with more percent of rural

population have lesser coverage of people under the scheme and vice versa. (e) A detailed review of state-wise positions on two fronts, i.e., percentage Population in Rural Areas vs

percentage Population covered under PMJDY

States

With <50 % Rural pop 50-60 % 60-70% 70-80% >80 % Total States

States

< 15 % Accounts J& K HP 2

15-25 %

25-30 % Goa Uttarakhand West Bengal

Chhattisgarh Jharkhand

Assam Bihar

Odisha 8

30-35 % Tamil Nadu

AP Haryana

Karnataka Punjab All India

Rajasthan 6

>35 % Gujarat Kerala

Maharashtra MP

UP 5

Total 1 4 6 6 4 Source : Computed from : http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf



Jammu and Kashmir and Himachal Pradesh despite having more than 70 per cent rural population have less than

15 per cent accounts opened in rural areas. Assam Bihar and Odisha too have between 25 to 30 per cent rural

accounts, despite rural population in the States being more than 80 per cent. Chhattisgarh and Jharkhand have

between 70 to 80 per cent rural population percent while percent rural accounts opened in the States are only

between 25 to 30 per cent. Gujarat Kerala and Maharashtra have better coverage in rural areas, as in these States

despite rural population account just about 50 to 60 per cent, and more than 35 per cent accounts are rural

accounts. Tamil Nadu is another State with about 50 to 60 per cent rural population, and 30 to 35 per cent accounts

being rural accounts.

(ii) Coverage of populace in states having variety of Percentage of population below poverty line

While in (i) attempt is made to highlight rural vs urban population coverage differentials across states , attempt is

made to cover in (ii) the relative positions of the states with more percentage of population below poverty line vis-à-

vis the percentage of population covered under PMJDY.

(a) Distribution of States with Respect to range of poverty levels

Percentage of Population Below Poverty Line by States : 2011-12 (Tendulkar Methodology) Rural Urban Total State/Union Territory %age of Persons %age of Persons %age of Persons Andhra Pradesh 10.96 5.81 9.20 Assam 33.89 20.49 31.98 Bihar 34.06 31.23 33.74 Chattisgarh 44.61 24.75 39.93 Goa 6.81 4.09 5.09 Gujarat 21.54 10.14 16.63 Haryana 11.64 10.28 11.16 H P 8.48 4.33 8.06 J and K 11.54 7.2 10.35 Jharkhand 40.84 24.83 36.96 Karnataka 24.53 15.25 20.91 Kerala 9.14 4.97 7.05 M P 35.74 21 31.65 Maharashtra 24.22 9.12 17.35 Tamil Nadu 15.83 6.54 11.28 Telangana Uttar Pradesh 30.4 26.06 29.43 Uttrakhand 11.62 10.48 11.26 West Bengal 22.52 14.66 19.98 Total 25.7 13.7 21.92 Notes: 1: Population as on 1st March 2012 has been used for estimating numbere of persons below poverty line (2011

Census extrapolated) Source: http://planningcommission.nic.in/news/pre_pov2307.pdf

http://planningcommission.nic.in/news/pre_pov2307.pdf


(b) Distribution of States with range of poverty levels

States

With <50 % Rural

pop 50-60 % 60-70% 70-80% >80 % Total States

States

< 15 % Accounts J& K HP 2

15-25 %

25-30 % Goa Uttarakhand West Bengal

Chhattisgarh Jharkhand

Assam Bihar

Odisha 8

30-35 % Tamil Nadu

AP Haryana

Karnataka Punjab All India

Rajasthan 6

>35 % Gujarat Kerala

Maharashtra MP

UP 5

Total 1 4 6 6 4 Source : Computed from : http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf Jammu and Kashmir and Himachal Pradesh despite having more than 70 per cent rural population have less than

15 per cent accounts opened in rural areas. Assam Bihar and Odisha too have between 25 to 30 per cent rural

accounts, despite rural population in the States being more than 80 per cent. Chhattisgarh and Jharkhand have

between 70 to 80 per cent rural population percent while percent rural accounts opened in the States are only

between 25 to 30 per cent. Gujarat Kerala and Maharashtra have better coverage in rural areas, as in these States

despite rural population account just about 50 to 60 per cent, and more than 35 per cent accounts are rural

accounts. Tamil Nadu is another State with about 50 to 60 per cent rural population, and 30 to 35 per cent accounts

being rural accounts.

(c) A Comparative View of the two distributions , i.e. States in Different percentage class of Coverage under

PMJDY vs Different percentage class of Poverty Levels

R = 0.50471 P-value = 0.586228 (using the t distribution) TTEST (2 Tailed , Type1)=

The r values indicate a positive correlation (despite relationship is not significant at 1 per cent level of confidence) ,

which means as percentage of level of poverty in the states increases, states also have more percentage of people

are covered under PMJDY. This thus reemphasise the concept of more inclusive growth and coverage of poor and

deprived sections of population.

d) A detailed review of state-wise positions on two fronts, i.e., percentage population

below poverty line vs percentage population covered under PMJDY



The analysis is carried out underneath to adjudge the performance of various States by categorising thee states.

The two dimensions being -1. Percentage people below poverty lines in the State (along rows) and 2. The

percentage share of accounts opened under the scheme by the state (along columns).

States in Different percentage class of Coverage of their Population under

PMJDY Remarks

Major States

Least <Avg Average > Avg Highest

States in Various Levels of Poverty

Least Kerala Goa

H P, Tamil Nadu

A P Punjab

< Avg Gujarat J & K

Haryana Rajasthan Uttarakhand

Average Maharashtra Assam Karnataka W Bengal

> Avg U P Highest Bihar

Jharkhand Odisha M P Chhattisgarh

Source : Computed from : http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf Kerala has least percentage of population covered under PMJDY and have least level of poverty too. Other states

having least levels of poverty are HP Tamil Nadu and Andhra Pradesh. While HP and Tamil Nadu had less than

average share of their population covered under the scheme, Andhra Pradesh and Punjab have more than all-India

average of per cent of population covered.

Amongst States with highest Levels of Poverty, Chhattisgarh has highest level of poverty but also lie in class of

highest level of coverage under PMJDY. MP too had highest level of poverty but satisfactory levels of performance

on fronts of PMJDY with more than average level of accounts opened under it. Odisha with average per cent of

population covered, and Bihar and Jharkhand with less than average coverage under PMJDY are poor performers

on the front, as they are falling in category of states with highest levels of poverty.

Uttar Pradesh lying in next category of states with more than average poverty levels, also seem to be lagging

behind with just about average performer in PMJDY accounts.



Source

Damgaard, C. and Weiner, J. "Describing Inequality in Plant Size or Fecundity." Ecology 81, 1139-1142, 2000.

Dixon, P. M.; Weiner, J.; Mitchell-Olds, T.; and Woodley, R. "Bootstrapping the Gini Coefficient of Inequality." Ecology 68, 1548-1551, 1987.

Dixon, P. M.; Weiner, J.; Mitchell-Olds, T.; and Woodley, R. "Erratum to 'Bootstrapping the Gini Coefficient of Inequality.' " Ecology 69, 1307, 1988.

Gini, C. "Variabilitá e mutabilita." 1912. Reprinted in Memorie di metodologia statistica (Ed. E. Pizetti and T. Salvemini.) Rome: Libreria Eredi Virgilio Veschi, 1955.

Kendall, M. G. (1970), Rank Correlation Methods, London: Griffin, ISBN 0-85264-199-0 Census of India , 2011, Govt of India Websites

1. http://www.censusindia.gov.in/2011-prov-results/paper2-vol2/data_files/himachal%20pradesh/statement%20%20wise1.5.pdf

2. http://planningcommission.nic.in/news/pre_pov2307.pdf 3. http://www.pmjdy.gov.in/Pdf/PMJDY_BROCHURE_ENG.pdf

http://www.censusindia.gov.in/2011-prov-results/paper2-

http://planningcommission.nic.in/news/pre_pov2307.pdf


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