Modi’s pet projects: A progress report

Jan Dhan: Banking for the unbanked

Launched in August 2014, the aim of Pradhan Mantri Jan Dhan Yojana was to provide access to core banking services to all unbanked households across India. The biggest ever bank account opening drive did yield some results, with 8 crore accounts opened in 100 days. The current tally of accounts, which is a little over 35 crore, is also no mean feat. Deposits in Jan Dhan have also risen substantially over the years. From ₹12,400-odd crore in February 2015, deposits in Jan Dhan accounts have crossed the ₹94,600-crore mark recently. The key issue of dormancy has also been addressed to some extent under Jan Dhan, with the routing of subsidies through these accounts.

However, raising deposit levels and increasing the number of transactions are imperative to make these accounts viable and revenue-generating for banks. Between 2010 and 2013, close to 110 million basic savings bank deposit accounts had been opened, but the balances in these accounts grew by a meagre 10 per cent annually, owing to high transaction costs.

Under Jan Dhan, the percentage of zero balance accounts have declined from 58 per cent in March 2015 to about 15 per cent as of January 2019. This is a key positive. But the biggest challenge in future will be in incentivising and nudging banks to provide credit to rural markets in a cost-effective way.

Ayushman Bharat: Healthy cover

The mega health insurance scheme — PMJAY — announced in the 2018-19 Budget provides a health insurance cover of ₹5 lakh to deprived rural families and identified occupational categories of urban workers’ families. The aim is to cover 10.74 crore families (about 50 crore beneficiaries). The scheme has made notable headway since launch.

As per the latest numbers, over 16 lakh beneficiaries have been admitted in hospitals and a little over 12 lakh claims have been submitted. The Centre has so far spent ₹952 crore on the scheme. Nearly 15,000 hospitals have been empanelled under PMJAY across the country, though just five States account for half the total number of empanelments. Given that the scheme was launched six months back, these numbers are no doubt encouraging.

However, it is important to keep in mind that this is not a number game. If the Centre’s real intent is to provide sustainable health insurance coverage to the poor, the focus needs to shift to creating a robust system that minimises frauds, eases up processes,and incentivises greater participation from the private sector. While the integration of Ayushman in States which already had health schemes has been smooth, in greenfield States, there are challenges.

The other key issue is portability, which is critical, as it allows a beneficiary from one State to go to another for treatment. So far, just 8,500 cases worth ₹22 crore have been ported.

PM Fasal Bima Yojana: Low yield

Launched in February 2016, the Pradhan Mantri Fasal Bima Yojana (PMFBY) addressed problems in the previous crop insurance schemes. It removed the cap on premium and offered higher coverage for risks. It also heavily subsidised the premium, charging only 2 per cent (of the sum insured) to farmers. Further, it covered localised calamities such as landslides affecting isolated farms, post-harvest losses and losses caused by inclement weather that prevented sowing. But despite being better than the old schemes in many ways, PMFBY has numerous loopholes in the scheme which are being exploited by insurers and others. For every season, the government floats fresh bids to identify the insurer for crops in a particular region. The insurer, is therefore, dis-incentivised from building infrastructure or recruiting staff to spread awareness or attempt to address users’ grievances. Farmers are not even issued a policy document that they can use to claim their dues.

The current crop-loss assessment process also calls for a lot of improvement. Even though the scheme guidelines require insurance companies to use remote-sensing technology and mobile applications in crop-cutting experiments (CCEs), not many do so. In its first year ( 2016-17), the number of farmers covered under PMFBY was 5.77 crore, up from 77 lakh under the Modified National Agricultural Insurance Scheme in the previous year. But in 2017-18, the number fell to 4.87 crore. Also, alarge number of claims remains unsettled.

eNAM: Mandis go online

Changing the mindset of farmers and traders and making them trade on an online platform is not easy. However, the electronic National Agriculture Market (eNAM) scheme launched in April 2016 has been a success. In the three years since launch, it has connected 585 mandis across 16 States and two Union Territories on one platform, with 1.51 crore farmers and 1,21,000 traders registering.

Commodities across all 585 mandis are sold by e-auction today. Any trader who wants to buy, say, pulses/cotton/chilli or any other agri commodity, has to log on to the eNAM portal and place a bid during the auction hours. The system then identifies the highest bid for every lot auctioned and declares the winners. This ensures that there is no manipulation of price by trade cartels. Further, all these mandis have also moved to electronic weighing scales that are integrated with the portal through Bluetooth. eNAM has also identified quality parameters for each crop and made farmers realise that assaying and grading of the produce fetches them a better price. Currently, however, not all produce sold on eNAM platform is assayed. But efforts are on to provide AI-based quality testing machines for grains and pulses at all mandis. Inter-mandi and inter-State trade has, however, started in a small way across a few eNAM mandis.

PM Ujjwala Yojana: Out of gas?

The Centre’s flagship Pradhan Mantri Ujjwala Yojana (PMUY) appears to be a runaway success with liquefied petroleum gas (LPG) cylinders distribution set to eclipse the March 2020 target of eight crore beneficiaries, well ahead of the target date.

According to official data, the scheme has already issued over 6.3 crore connections till January 31, 2019 and spent around ₹8,000 crore over the past three years.

The project — rolled out on May 1, 2016 — entailed giving deposit-free LPG connections to women below the poverty line if no one in their household had an existing connection. The stated goal was to attempt a behavioural change among citizens who relied on firewood, cow dung, etc, as a fuel to cook food.

What is of concern is, whether those who can’t afford to pay for a cylinder in the first place, can buy one at the market rate.

The average refills ordered by PMUY beneficiaries in 2017-18 was 3.7 cylinders compared with 7.3 for regular users. This has, however, been achieved through the loan of the first six cylinders. This loan amount is to be recovered after the sixth 6th refill through the cooking gas subsidy.

PM Awas Yojana: Room to improve

Launched in 2015, the Pradhan Mantri Awas Yojana — Housing for All by 2022 (urban) Scheme — included the Centre providing a grant under the slum rehabilitation programme and central assistance for individual house construction or enhancement. Importantly, it included a Credit-linked Subsidy Scheme (CLSS) offering an interest subvention of 6.5 per cent on housing loans of up to ₹6 lakh for a tenure of 20 years to the economically weaker sections (EWS) and the low income groups (LIG). Subsequently, the scope of CLSS was widened to include the middle-income category. PMAY(U) has, to some extent, addressed some of the prevailing issues; bringing more uniformity in calculation of interest subsidy and raising the income ceilings for EWS and LIG categories. There has also been a sharp rise in beneficiaries under CLSS. Subsidies of over ₹8,300 crore have been disbursed to over 3.7 lakh beneficiaries. But the very objective of PMAY(U) was to cater to the needs of the EWS/LIG segment. The inclusion of the middle-income group has detracted attention away from its original beneficiaries.

According to latest data 79,03,674 houses have been sanctioned under PMAY(U), and so far 16,04,342 houses have been constructed.

Smart Cities: Not smart yet

The Smart Cities Mission, launched in 2015 to transform 100 cities into smart cities, has made slow progress. While projects have commenced in many cities, the five-year timeline seems ambitious. According to realty consultant Anarock, only 6 per cent of the estimated ₹2.03 lakh-crore allocated for the development of smart cities has been released in three years.

More than half the projects are still in the tendering stage, while less than 40 per cent are completed or under implementation. Of the 5,000-odd projects under the Mission, tendering has taken place in about 2,700, while projects completed or under implementation are about 2,000.

The slow progress has been due to several reasons, including delays in planning, land acquisition problems and governance bottlenecks. Interestingly, smaller cities such as Indore, Bhopal, Surat, Bhubaneswar and Ahmedabad have shown better progress than larger ones. According to Anarock, smaller cities face lesser resistance to change and less dense urbanisation.

GST: Good and serviceable tax

The Goods and Services Tax, that was 17 years in the making, finally rolled out on July 1, 2017. It was under the Modi government that the method of revenue-sharing between the Centre and the States was determined; the Constitutional Amendment Bill was passed by both Houses of Parliament and the corresponding legislative changes made by all the States.

The next big challenge was migrating all the indirect tax payers of Central excise duty, service tax, VAT, sales tax, and so on, to the GST network. The famed Indian bureaucracy across the country rose to the occasion to handhold millions of businesses to first register on the GSTN and then begin filing the returns for the GST. Of the 1.28 crore registered users on the GSTN, 66 lakh have transited from the old system, while there have been 63.8 lakh new registrations.

While small businesses struggled in the initial days, the initial hump has been crossed and all taxpayers are filing the summary returns and claiming input tax credit as well. GST revenue collections, while below the budgeted numbers, are averaging ₹1 lakh crore per month. The anomalies in tax rates for various sectors have also been largely sorted out over the last couple of years.

The shortcoming at the current juncture is the inability to implement anti-evasion measures such as invoice matching as per the original design. Giving too much leeway to small businesses in filing returns is also likely to prevent expansion of tax base. Further simplification of tax rates and the returns is next on the agenda.

Swachh Bharat: A cleaner rural India

Did you know that nearly 40 out of 100 Indians openly defecated in India even until three to four years back? We were even lagging behind most of the poorest countries such as Ethiopia and Uganda where the open defecation rate during the same time period was 27 and 6 per cent of the total population respectively.

But our numbers would, now, look significantly different, thanks to the Swachh Bharat Mission (SBM), a nation-wide campaign started with the key objective of eliminating open defecation through the construction of household and community toilets.

Going by the numbers presented by the government, so far, about 92 million household toilets have been constructed in the rural area, providing toilets to about 99 per cent of the total households in rural India compared with around 37 per cent in 2014. While implementation of SBM in rural India is impressive, the progress in urban India is stagnant.

Out of about 58 lakh applications approved for household toilets, only 11.4 lakh toilets were constructed.

It was also reported that many of the toilets constructed did not meet the specifications laid down by the government.

However, there is an undeniable change in the behaviour of a large segment of the population with respect to toilet access and usage. As per the National Annual Rural Sanitation Survey 2017-18, an independent survey, people defecating in the open has fallen from 550 million at the beginning of the SBM programme to about 200 million in March 2018.

Make in India: Progress on some fronts

If the objective of Make in India is taken as import substitution, very little progress has been made, going by official numbers. But FDI has been increasing in the last four years and nine months, with as much as $268.5 billion received in this period. In contrast, between 2004 and 2014, the aggregate FDI inflows were $304 billion.

But the direction of FDI flows is not satisfactory with services and automobiles dominating the flows. For areas such as infrastructure construction and power, the annual flows are still just a $1-2.7 billion, a fraction of what is required.

On another front, the headline ranking in the ease of doing business has jumped an impressive 65 positions to 77 in 2018 from 142 in 2014. What is welcome in these rankings is that in areas such as construction permits and procuring electricity, the rankings have improved by 113-132 positions in the last four years. But in areas such as paying taxes, resolving insolvency, enforcing contracts and starting a business, the country’s positions are at a poor 108-163.

Reports by Lokeshwarri S K, Radhika Merwin, Rajalakshmi Nirmal, Anand Kalyanaraman, Venkatasubramanian K, Satya Sontanam, Vivek Ananth

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