From Leakages To Lifelines: How Jan Dhan Rewired India's Welfare

In 1985, the then Prime Minister, Rajiv Gandhi, had made a candid yet damning admission that “only 15 paise of every rupee spent on welfare ever reached the poor”. His admission underscored the fact that for decades welfare schemes were reduced to a playground for middlemen, where the needy were left waiting while corruption flourished.

Programmes that were designed to uplift citizens instead became conduits for loot, whether it was the infamous ₹950 crore Fodder Scam in Bihar or lakhs of “ghost beneficiaries” under MGNREGA. The story was grim, revealing how the hard-earned money of Indian taxpayers was routinely getting misappropriated instead of benefitting the people it was meant to serve.

However, on 15th August 2014, the announcement of the Pradhan Mantri Jan Dhan Yojana heralded the beginning of a new era of financial empowerment for every Indian. Launched on 28th August, the scheme has since transformed the country’s financial landscape. As it marks its eleventh year, the success of this initiative has been nothing short of remarkable, positioning India at the forefront of global financial inclusion.

Ending Financial Deprivation

We cannot expect the poor to rise when they remain disconnected from any formal system of welfare delivery. In 2014, only 35% of Indian adults had a bank account, and in rural India the figure was as low as 21%. How then could anyone expect benefits to truly reach the people, when the harsh reality was that access to credit itself rested at the mercy of a middleman?

Now, PMJDY has been credited as the world’s largest financial inclusion programme, when almost 100 percent of households and 90% of adults have bank accounts. Today, 99.9% of all inhabited villages have a bank outlet within a 5 km range.

This has led to direct benefit transfers into the accounts of 56.16 crore beneficiaries with ₹267,755.64 crore balance in accounts. The JAM Trinity, which refers to Jan Dhan, Aadhaar and Mobile, has been credited with saving over 3.48 lakh crore rupees from corruption and leakages.

Women Empowerment

Swami Vivekananda once said, “There is no chance for the welfare of the world unless the condition of women is improved. It is not possible for a bird to fly on only one wing.”

Women, long revered in our culture as the ghar ki Lakshmi, were for decades excluded from the formal banking sector. Despite being the backbone of households and contributors to the economy, they lacked access to secure savings, credit, and social security. PMJDY changed that narrative, bringing dignity, independence, and opportunity into the lives of millions of women.

Now, out of all the bank accounts, nearly 40% of the total bank accounts in India and 55% of all the PMJDY beneficiaries are held by women. This has facilitated the coverage of women with various social security and credit-linked schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana.

JAM Trinity: From Government to Citizens, Seamlessly

Nobel laureate Paul Romer has hailed India’s Aadhaar as one of the world’s most significant innovations, noting how it has streamlined welfare delivery, enabled direct transfers, curbed fraud, and provided millions with a reliable identity, making public services more accessible and inclusive.

This impact has only been amplified through the JAM Trinity, which stands for Jan Dhan accounts, Aadhaar, and Mobile. It opens accounts for beneficiaries, verifies their identity through Aadhaar, and enables direct transfers via mobile. This makes welfare delivery seamless, efficient, and accessible without the need for multiple visits.

The JAM Trinity has acted as the backbone of India’s welfare revolution. From social security schemes like the Atal Pension Yojana with 7.33 crore enrolments, to the Pradhan Mantri Jeevan Jyoti Bima Yojana covering 22.52 crore beneficiaries and disbursing ₹17,600 crore in claims, JAM has made benefits reach directly to the deserving.

Beneficiary coverage has surged 16-fold, from 11 crore in 2014 to 176 crore today, while the Welfare Efficiency Index has leapt from 0.32 in 2014 to 0.91 in 2023. This leap has been driven by JAM’s architecture.

In effect, JAM has not only given every Indian a secure identity but also expanded the safety net for the poor, transforming welfare delivery into a system of dignity, transparency, and empowerment.

Online financial transactions through the UPI-based applications have reached a new milestone, surpassing 700 million for the first time, with 707 million recorded on the 2nd of this month, according to the latest report from the National Payments Corporation of India (NPCI). Over the last two years, the number of daily transactions has doubled, with UPI now powering around 85% of all digital transactions in India and nearly 50% of global real-time digital payments.

Quick Response in Times of Distress

The Chief Economic Adviser highlighted that the Centre transferred nearly ₹8.1 lakh crore directly into beneficiaries' bank accounts during the three Covid-hit financial years (FY20 to FY22). This massive transfer, coupled with the evolution of digital payment infrastructure, enabled seamless, no-touch payments during the peak of the pandemic, ensuring that aid reached people without delay or intermediaries.

In stark contrast, during the 2005 Bihar floods, an investigation by the vigilance bureau revealed that while the government had sanctioned ₹13.33 crore for relief material in 2004, officials in connivance with district authorities misappropriated over ₹25 crore by diverting the funds meant for flood victims in North Bihar.

Improving Various Welfare Schemes

DBT has been a game-changer in reducing inefficiencies and corruption across key welfare programmes.

In the Public Distribution System (PDS), the introduction of Aadhaar-linked ration cards brought much-needed transparency, saving ₹1.85 lakh crore, which accounts for half of the total savings across schemes.

MGNREGS, which struggled with delays and fraud, now sees 98% of wages paid on time, saving ₹42,534 crore and ensuring that workers receive their due without unnecessary hindrances.

For farmers, PM-KISAN has streamlined its processes, cutting out ineligible beneficiaries and saving ₹22,106 crore. This ensures that support reaches only those who need it most.

Even in the fertiliser subsidy sector, DBT helped reduce wasteful distribution, saving ₹18,699.8 crore by targeting disbursements more effectively and cutting down on unnecessary fertiliser sales.

Ensuring the Health of the Vulnerable

Beyond financial security, PMJDY has laid the groundwork for health inclusivity. Without the widespread opening of Jan Dhan accounts, schemes like Ayushman Bharat PM-JAY could not have reached millions of vulnerable families, as accounts provide the essential channel for identification, awareness, claim processing, and direct transfer of benefits.

While 70% of Indians had no health insurance in 2015, the shift is evident in the decline of out-of-pocket health expenditure from 64.2% in 2013-14 to 39.4% in 2021-22. This reduction underscores the success of Ayushman Bharat PM-JAY, the world’s largest health assurance scheme, providing ₹5 lakh coverage per family for secondary and tertiary care hospitalisation.

Targeting over 12 crore poor and vulnerable families, approximately 55 crore beneficiaries, it covers the bottom 40% of the Indian population, offering a comprehensive safety net. PMJDY has thus evolved from being just a financial inclusion initiative to a life-changing force, enabling millions to access both financial and health security, and building a stronger, more resilient India.

As PMJDY enters its 12th year, the priority shifts to reinforcing and expanding its influence. A nationwide push for complete financial inclusion has been launched, with banks setting up camps to refresh KYC records, facilitate the opening of new accounts, and raise awareness about micro-insurance and pension plans. Concurrently, efforts are being made to minimise the number of dormant accounts under PMJDY.