28 August 2024 : Indian Express Editorial Analysis

1. A SYSTEM TO BANK ON

(Source: Indian Express; Section: The Editorial Page; Page: 08)

Topic: GS2– Governance – Government policies – Interventions for development in various sectors

Context:

The article discusses the impact and progress of India’s financial inclusion initiative, the Pradhan Mantri Jan Dhan Yojana (PMJDY), launched in 2014.

What is Pradhan Mantri Jan Dhan Yojana?

• PMJDY creates a platform for universal access to banking facilities with at least one basic banking account for every household, financial literacy, and access to credit, insurance, and pension facilities.
• Features of PMJDY:
• It aims to expand banking services through branches and Banking Correspondents (BCs).
• It covers both urban and rural areas and those who open an account would get indigenous Debit Card (RuPay card).
• There is no requirement to maintain any minimum balance in PMJDY accounts.
• Accident Insurance Cover of Rs.1 lakh (enhanced to Rs. 2 lakh to new PMJDY accounts opened after 28.8.2018) is available with RuPay card issued to the PMJDY account holders.
• It provides an overdraft facility of Rs. 10,000 to every eligible adult.
• PMJDY accounts are eligible for Direct Benefit Transfer (DBT), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY).

Introduction to Financial Inclusion and PMJDY

• Financial inclusion has been a critical tool for policymakers and governments globally, aimed at reducing inequalities, enhancing livelihoods, and driving economic growth, particularly for those at the bottom of the economic pyramid.
• In India, a significant step toward financial inclusion was the launch of the Pradhan Mantri Jan Dhan Yojana (PMJDY) on August 28, 2014. This mass financial inclusion scheme, leveraging technology through the JAM trinity (Jan Dhan-Aadhaar-Mobile), was devised in two phases to include unbanked households in a time-bound manner.
• The goal was to provide banking facilities to 7.5 crore unbanked households, marking a pivotal moment in the nation’s financial inclusion journey.

Progress and Impact of PMJDY

• The PMJDY has achieved remarkable success in expanding financial access. As of today, over 80% of adults in India have a formal financial account, a significant increase from around 50% in 2011.
• The scheme has effectively reduced the gender gap in account ownership by focusing on individual savings bank deposit accounts, moving away from the previous household-based approach.
• With around 53 crore PMJDY accounts opened, holding a balance of Rs 2.31 lakh crore, the scheme’s impact is evident. The average account balance has quadrupled from Rs 1,065 in March 2015 to Rs 4,352 in August 2024, underscoring the growing financial engagement among account holders.

Regional and Social Impacts

• The PMJDY has had far-reaching social implications across various states in India. Research indicates that states like Uttar Pradesh (UP), Maharashtra, and Haryana have seen a lagged but positive impact on social issues such as reduced thefts.
• Meanwhile, states like West Bengal, Tamil Nadu, and Kerala have experienced a consistent positive impact since the scheme’s inception.
• Additionally, a significant decrease in the consumption of intoxicants such as alcohol and tobacco has been observed in states with higher numbers of PMJDY accounts.
• These social changes highlight the broader societal benefits of increased financial inclusion.

Economic Benefits and Digital Transformation

• Over the last decade, the PMJDY has facilitated the transfer of Rs 38.49 lakh crore through Direct Benefit Transfers (DBT), plugging leakages amounting to Rs 3.48 lakh crore.
• The scheme has also accelerated digitalization, contributing to the growth of e-commerce and payment systems. As of July 2024, India recorded an impressive 55.7 billion UPI transactions, reflecting the profound impact of PMJDY on the digital economy.

Future Challenges and Strategic Pillars

While the PMJDY has made significant strides, several challenges remain to ensure sustained financial inclusion. The government has identified four major pillars to address these challenges:

• Strengthening the Ecosystem and Enablers: There is a need to enhance the ecosystem driving financial inclusion by promoting private-sector involvement, fostering partnerships, and building the capacities of individuals and small enterprises through financial literacy programs. A focus on gender-inclusive financial services is also crucial.
• Increasing Penetration of Financial Products: Expanding access to financial products such as micro-insurance and credit is essential. However, care must be taken to avoid over-indebtedness among new PMJDY account holders. The recently launched Unified Lending Interface aims to streamline the lending process, making it more cost-effective and scalable.
• Enhancing Consumer Protection: Strengthening the consumer protection framework is vital to maintaining trust in digital financial products. Inclusive regulations that balance innovation with consumer protection are necessary to safeguard the interests of new financial consumers.
• Designing Customer-Centric Products: PMJDY account holders, often new to the formal financial system, have unique needs due to their irregular income streams and limited savings. Designing financial products that cater to the lifecycle needs of these customers is essential for their continued engagement with the financial system.

Conclusion

• The PMJDY has successfully brought millions into the formal financial system, providing a foundation for their economic empowerment.
• As the government continues to push for inclusive growth, it is crucial to explore ways to interlink PMJDY accounts with other government schemes, ensuring a holistic approach to economic development at the bottom of the pyramid.

What are the Other Government Initiatives to Promote Financial Inclusion in India?

National Centre for Financial Education (NCFE)   Unified Payments Interface   Micro Units Development and Refinance Agency (MUDRA)   Small Finance Banks (SFBs) and Payment Banks   Jan Dhan Darshak App

PYQ: Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion. (200 words/12.5m) (UPSC CSE (M) GS-3 2016)

Practice Question:  Examine the role of the Pradhan Mantri Jan Dhan Yojana (PMJDY) in promoting financial inclusion in India. Discuss the social and economic impacts of the scheme, and outline the challenges and strategic measures necessary for sustaining financial inclusion in the future. (250 words/15 m)

2. The Nyaya Sanhita we need

(Source: Indian Express; Section: The Ideas Page; Page: 09)

Topic: GS2– Governance – Government policies – Interventions for development in various sectors

Context:

The article discusses the evolution of India’s legal and economic landscape in the context of the rise of younger generations like Gen Z and Millennials. It highlights the transformative impact of technology, economic growth, and legislative reforms in India.

Rise of a New Generation and Economic Transformation

• At the turn of the millennium, the emergence of Gen Z, Millennials, Zillennials, and other young cohorts marked a significant cultural and economic shift in India.
• Driven by substantial economic growth, the internet revolution, and aspirations for startups, these generations reshaped India’s economic landscape.
• This technological surge led to lifestyle changes, fueled the telecom revolution, and triggered an infrastructure boom, transforming the nation’s socio-economic fabric.

Legislative Advancements and the Need for Legal Reforms

• As India advanced technologically and economically, new legislative measures became necessary to protect and benefit its people.
• The introduction of laws like the Aadhaar Act, GST, Companies Act, Food Safety Act, Insolvency and Bankruptcy Code, and others reflected the evolving governance and economic thought in India.
• These reforms were aimed at enhancing efficiency, transparency, and accountability, particularly in a rapidly digitalizing world.
• However, the question arises: does everything need to change? This is particularly relevant in the context of the recent overhaul of India’s criminal justice system.

Continuity and Change in India’s Criminal Law

• The old laws governing India’s criminal justice system, recently replaced, were established in the 19th century during a time of significant transformation and intellectual reform.
• These laws, including the Indian Penal Code (IPC), were designed to address fundamental human behaviors and crimes, such as murder, theft, and offenses against women and children.
• Despite the passage of time, these crimes remain relevant, raising the question of whether a complete overhaul was necessary.
• Interestingly, the newly introduced Bharatiya Nyaya Sanhita (BNS) retains large portions of the IPC, with only a few additional offenses and amendments.
• This suggests that while change is inevitable, not all aspects of the criminal law required re-enactment, as the existing laws have evolved over time to meet societal demands.

The Digital Era and the Need for Updated Legal Provisions

• The 21st century is characterized by rapid technological advancements, with the internet, AI, and digital platforms becoming integral to daily life.
• Crimes have also evolved, with new-age offenses like cyberbullying, email phishing, online fraud, and deepfake technology posing significant challenges.
• Despite this, the BNS does not adequately address these modern cybercrimes, leaving terms like “data,” “cyber,” and “virtual” largely undefined in the new legal framework.
• This oversight is critical as crimes in the digital realm, such as data theft, online impersonation, and AI-generated fraud, are becoming increasingly prevalent. The absence of specific legal provisions to address these issues highlights a missed opportunity to update the criminal justice system in line with contemporary technological realities.

Challenges of Drafting Laws in the Modern Age

• Drafting laws, especially those with penal consequences, requires clarity and precision to prevent misuse and ensure fairness.
• The BNS, while aiming to modernize the criminal justice system, introduces concepts like “economic security” and “economic offenses” without clear definitions, risking the potential misuse of these provisions.
• Additionally, the power to invoke these laws is often left to local authorities, which could lead to arbitrariness and misuse.
• Furthermore, while the BNS claims to have made various offenses gender-neutral, certain provisions, such as those related to rape, remain gender-specific. Other new offenses, like attempting to commit suicide to compel or restrain from applying lawful power, could be misused to suppress political dissent, affecting fundamental rights like hunger strikes.

The Necessity for Law to Evolve with Society

• As society rapidly evolves, so must the laws that govern it. Justice Bhagwati’s observation that “law must constantly be on the move adapting itself to the fast-changing society” is particularly relevant today.
• The legislative opportunity presented by the overhaul of India’s criminal laws should have embraced the dramatic changes in criminal behavior brought about by technological advancements.
• Unfortunately, the BNS falls short in addressing these critical issues, leaving the legal system somewhat outdated in the face of modern challenges.

Practice Question:  Critically analyze the recent changes in India’s criminal justice laws with respect to their adequacy in addressing modern digital crimes. Do these changes sufficiently reflect the evolving socio-legal landscape of the 21st century? (250 words/15 m)