Indicus Centre for Financial Inclusion

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JAM or BAPU – which works best for DBT?

The Economic Survey 2015-16 has an excellent chapter analysing the progress of JAM and impediments to its further spread. The Chapter Spreading JAM across India’s Economy analyses the existing schemes to conclude that the Centre should prioritise areas where it has the highest control over the first- and middle-mile factors and leakages are high. Fertiliser and within-government transfers stand out as good candidates.

There are clear maps that show the inadequacy of the last mile reach of the banking network and the varied penetration of mobile coverage across states. A JAM Preparedness Index has been constructed in rural and urban areas across states: There is as expected significant variation across states. When it comes to urban areas, some, like Madhya Pradesh and Chattisgarh, show preparedness scores of about 70 per cent. Others, like Bihar and Maharashtra, have scores of only about 25 per cent. The DBT rural preparedness scores are significantly worse than the urban scores, with an average of 3 per cent and a maximum of 5 per cent (Haryana).

The analysis concludes that unless the bank network is fixed at the last mile, the best strategy for the government is to go for BAPU – in other words – Biometrically Authenticated Physical Uptake. Beneficiaries verify their identities through scanning their thumbprint on a POS machine while buying the subsidised product—say kerosene at the PDS shop. This calls for automation of all PDS shops as well as installing Aadhaar-enabled POS machines at these shops.

The chapter notes: BAPU preparedness is much better than for Rural DBT preparedness. The average state preparedness is 12 per cent (Figure 12), but there are some states – like Andhra Pradesh (96 per cent), Chattisgarh (42 per cent) and Madhya Pradesh (27 per cent) – that with some policy push could be well-prepared for BAPU in the near future.

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