Jan Dhan Accounts Keep Villagers Sober, Slow Rural Inflation: SBI Study

A study by the economic research wing of the State Bank of India (SBI) suggests that the residents of villages, those of who opened bank accounts under the Prime Minister's Jan Dhan Yojana (PMJDY) may be saving more and cutting back on their consumption of alcohol and tobacco. A report in the Times of India reports that this may have also slowed inflation in the rural areas.

The article suggests that the study using retail inflation data showed that states with more than 50 per cent share of Jan Dhan account in villages had a "meaningful drop in inflation".

Most Jan Dhan accounts were opened after the demonetisation in November last year. The SBI study analysed the state-wise impact of PMJDY accounts on rural and urban consumer price index.

"The analysis confirms that besides formalisation of the economy, financial inclusion has had tangible benefits which are visible in the inflation data," the study said.

Times quotes former chief statistician Pronab Sen, as saying that the availability of banking channels could trigger a change in behaviour. "It is well known that your spending behaviour changes when you have cash with you compared to money in the bank. It's the same when you have a credit card," he added.