Mantri Pradhan The PMJDY, or Jan-Dhan Yojana, is essential for integrating the unbanked into institutional finance. Do you support this approach to financial inclusion for the less fortunate members of Indian society? Provide evidence to support your position. (200 words) [UPSC 2016]
TeamSupreme
Pradhan Mantri Jan-Dhan Yojana (PMJDY) and Financial Inclusion
Importance of PMJDY for Financial Inclusion:
Challenges and Considerations:
Conclusion:
PMJDY is crucial for financial inclusion as it provides basic banking services to the unbanked, promotes direct transfers, and enhances financial literacy. However, addressing challenges related to infrastructure and literacy is essential for maximizing its impact.
Model Answer
Introduction
Financial inclusion aims to provide vulnerable groups, such as low-income households, with access to financial services and credit at affordable rates. The Government of India defines this process as ensuring that these groups can avail themselves of necessary financial services. The Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a significant initiative in this context, having successfully banked over 46.25 crore beneficiaries since its inception.
PMJDY’s Role in Financial Inclusion
PMJDY is crucial for bringing the unbanked into the institutional finance fold through several mechanisms:
Challenges and the Path Forward
While PMJDY has made significant strides, challenges remain. A World Bank study highlights that over 43% of bank accounts in India are dormant, indicating low engagement. To prevent accounts from becoming inactive, it is essential to promote financial literacy, ensure effective DBT, and encourage a cashless payment system.
Conclusion
PMJDY is a landmark step towards financial inclusion for the poorer sections of society. However, continued efforts are required to keep these accounts active and ensure that the benefits of financial inclusion are fully realized. A collaborative approach involving the government and civil society will be key to achieving these objectives.