26/05/2015 6:21 PM IST | Updated 15/07/2016 8:25 AM IST

Modi's Claims About Jan Dhan Yojana Are, Shall We Say, Exaggerated

Hindustan Times via Getty Images
NEW DELHI, INDIA FEBRUARY 17: Prime Minister Narendra Modi during a function to celebrate the elevation to sainthood of Kuriakose Elias Chavara and Mother Euphrasia on February 17, 2015 in New Delhi, India. Prime Minister Modi has said that his government will ensure that there is complete freedom of faith and that everyone has the undeniable right to retain or adopt the religion of his or her choice without coercion or undue influence. (Photo by Virendra Singh Gosain/Hindustan Times via Getty Images)

Prime Minister Narendra Modi claimed full credit for bringing financial inclusion to the people India in his 25 May 2015 speech in Mathura.

That's not, how should I put it, consistent with the facts. Take a look a the chart below that shows how many "Basic Savings Bank Deposit Accounts" (BSBDA) were opened over the past six years. In the two years before Modi, the annual increase in the number of BSBDAs was 44 and 61 million, which jumped to 147 million in 2014-15 (for simplicity let's give Modi credit for all accounts opened that year, including the month-and-a-half prior to his taking office in mid-May).

Now 147 million is an impressive number, even in comparison with the previous year's 61 million. But to understand what Modi is bringing to the table in terms of vision and acumen, you need to estimate how much better he is doing than his predecessor would have. A linear extrapolation from the previous trend gives you around 90 million new accounts in 2014-15 under a third United Progressive Alliance (UPA) government. But let's be strict and assume that the UPA would have added the same number of accounts as it did the previous year. Under that assumption, the Modi effect is a net addition of 86 million accounts.


That's still a solid number, leaving aside criticisms that more than half of all Jan Dhan Yojana (JDY) accounts are dormant, and that there has so far been minimal utilisation of the admittedly useful features (overdraft facility, life insurance, accident insurance) that JDY brings to the table. But raising the tally by a fifth does not even come close to single-handedly bringing financial inclusion to India's poor.

This post was first published on CHUNAUTI.

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