MPSC 2023 Prelims Paper-I · Question 59 of 100

Correct — option (3), Pradhan Mantri Jan Dhan Yojana. The scheme was announced by the Prime Minister in the Independence Day address of 15 August 2014 and launched on 28 August 2014 as a national mission for financial inclusion, and both halves of the stem — the year and the purpose — point to it. Financial inclusion means bringing households that have been outside the formal financial system into it, and the mission was built to deliver a package rather than a single benefit. Its core is a basic savings bank deposit account that can be opened with no minimum balance, so that the cost of holding an account no longer excludes a poor household. To that account is attached a RuPay debit card, which gives the holder the means to use the account rather than merely to possess it, together with accident insurance cover carried by the card and, for accounts opened in the first phase, a small life cover. An overdraft facility is available to eligible account holders after a period of satisfactory operation, which is the point at which an account begins to function as access to credit and not only as a place to keep money. The mission also worked on the supply side by extending banking outlets and business correspondents into unbanked areas, so that an account could be opened and operated within reach of the household. Its importance goes well beyond the accounts themselves: a universal bank account is the first leg of what came to be called the JAM trinity — Jan Dhan accounts, Aadhaar identification and mobile telephony — which made it possible to transfer subsidies and benefits directly into the bank accounts of beneficiaries instead of delivering them in kind through intermediaries. That is why the scheme is treated as the foundation of the direct benefit transfer architecture, and why it is the answer here. Note that the English stem prints 'which of the following Scheme' in the singular with a capital S, as in the booklet.

• (1)Demonetization Scheme — This option fails on both of the stem's tests. On timing, the withdrawal of the legal tender status of the five hundred and one thousand rupee notes was announced in November 2016, not in 2014, so it falls outside the year named. On purpose, it was not a financial inclusion measure at all: its stated objects concerned unaccounted money, counterfeit currency and the financing of illegal activity, and it operated by removing a large part of the currency in circulation rather than by extending access to banking. It is true that the episode had a side effect on inclusion, since people needed accounts in order to deposit the withdrawn notes and account use rose sharply for a period, but a consequence of a measure is not its purpose, and a candidate who chooses this option has matched a well-known event to a question about banking without checking either the year or the object.
• (2)Property Disclosure Scheme — No financial inclusion programme was launched under this name in 2014. The disclosure measures of this period ran in an entirely different direction: the black money law of 2015 dealt with undisclosed foreign income and assets, and the Income Declaration Scheme of 2016 gave a window for declaring undisclosed domestic income on payment of tax and penalty. Such schemes are revenue measures whose object is to bring concealed assets into the tax net, which is close to the opposite of financial inclusion, whose object is to bring excluded people into the financial system. This option is in the set as a plausible-sounding but generic title, and the way to dispose of it is to ask what the scheme would actually do — a disclosure scheme is addressed to those who already have assets to disclose, not to households without a bank account.
• (4)All of the above — An 'all of the above' choice can only stand if every preceding option stands, and here two of them fail plainly. The demonetisation of high-value notes belongs to November 2016 and was not an inclusion measure, and no financial inclusion scheme bearing the second title was launched in 2014. Because both fail, the escape option is closed regardless of how strong the third option is. This is worth stating as a general rule for such items: the presence of a single clearly correct substantive option combined with even one clearly wrong one is enough to eliminate the escape, and the candidate who is confident about Pradhan Mantri Jan Dhan Yojana should therefore spend the remaining moments checking the weakest of the other options rather than re-examining the one already settled.

Financial inclusion is the delivery of financial services — a savings account, payments, credit, insurance and pension — at affordable cost to sections of the population that the formal system has not reached, and its history in India runs long before 2014. Bank nationalisation in 1969 and again in 1980 was justified largely in these terms, as was the branch expansion policy that followed, the lead bank scheme, priority sector lending targets, the regional rural banks created in 1975, and the self-help group and bank linkage programme that grew from the 1990s. What distinguished the 2014 mission was its combination of universality and technology: an account for every household without a minimum balance requirement, a debit card to make the account usable, and identification and mobile connectivity to make transfers into it verifiable and cheap. That combination is what the phrase JAM trinity captures, and it is what allowed direct benefit transfers to expand from a handful of programmes to the routine method of delivering subsidies and cash entitlements. Payments banks and small finance banks, licensed in the same period, were a further part of the architecture, designed to serve small savers and small borrowers whom the older banking structure had found expensive to reach.

Government schemes with a launch year attached are the most frequently asked single category in MPSC's economy and current affairs sections, and the Commission's usual construction is the one used here: name a year and a purpose in the stem, and offer options that are real enough to be recognised but that fail on one of the two tests. The efficient defence is to check each option against both tests separately, because an option that fails the year cannot be rescued by being important and an option that fails the purpose cannot be rescued by falling in the right year. Demonetisation is the classic instance of the second kind, since it is the best-known financial event of the decade and is constantly offered as a distractor in questions about banking, currency and inclusion. The wider lesson for preparation is to hold each major scheme as a small note containing the year, the ministry, the beneficiary and the benefit, since the question can be built from any one of those four and answered from the note in a few seconds.

• Pradhan Mantri Jan Dhan Yojana was announced in the Prime Minister's Independence Day address of 15 August 2014 and launched on 28 August 2014 as a national mission for financial inclusion.
• Its core benefit is a basic savings bank deposit account requiring no minimum balance, accompanied by a RuPay debit card carrying accident insurance cover and, for accounts opened in the first phase, a small life cover.
• An overdraft facility is available to eligible account holders after a period of satisfactory operation, which converts the account from a place to keep money into a point of access to formal credit.
• The scheme forms the first element of the JAM trinity — Jan Dhan accounts, Aadhaar and mobile telephony — which underpins the direct benefit transfer of subsidies and cash entitlements into beneficiaries' own accounts.
• The demonetisation of five hundred and one thousand rupee notes was announced in November 2016 and was directed at unaccounted money and counterfeit currency, not at financial inclusion, so it fails both tests set by this question.

• Matching a famous financial event to a banking question without checking the year, which is how demonetisation collects marks in questions about 2014
• Treating a side effect as a purpose, since demonetisation increased account use without being an inclusion measure
• Accepting a generic-sounding scheme title as real without asking what the scheme would actually do and for whom
• Taking 'all of the above' when at least one of the preceding options plainly fails, which closes the escape whatever the others are worth

Scheme questions in MPSC papers ask for the launch year, the administering ministry, the beneficiary group, the specific benefit, or the umbrella programme a scheme belongs to. Flagship schemes such as this one appear repeatedly across years and in several of those forms, and the Commission often builds the option set from other well-known measures of the same period so that the candidate must separate them by purpose rather than by fame. Preparing a four-line note for each major scheme — year, ministry, beneficiary, benefit — and adding one line on what the scheme is commonly confused with covers nearly every variant, including the negative form that asks which statement about a scheme is not correct.

No directly related past PYQ was found.

• practice — not a real PYQ

  The JAM trinity, which underpins the direct benefit transfer of subsidies in India, consists of which of the following three elements ?

  • (a)Jan Dhan accounts, Aadhaar and mobile telephony
  • (b)Jan Dhan accounts, agriculture and manufacturing
  • (c)Jute, aluminium and manganese
  • (d)Jan Aushadhi, Aadhaar and microfinance

  Answer(a) Jan Dhan accounts, Aadhaar and mobile telephony — the account gives every household a destination for a transfer, Aadhaar allows the beneficiary to be identified without duplication, and the mobile phone makes the transaction cheap to authorise and to confirm. Together they replaced delivery of subsidies in kind through intermediaries with direct transfers into the beneficiary's own bank account.

• practice — not a real PYQ

  Which of the following is the principal account benefit offered under the Pradhan Mantri Jan Dhan Yojana ?

  • (a)A fixed deposit at a guaranteed rate of interest
  • (b)A basic savings bank deposit account with no minimum balance requirement
  • (c)A monthly pension after the age of sixty
  • (d)A subsidised housing loan

  Answer(b) A basic savings bank deposit account with no minimum balance requirement — the absence of a minimum balance is what makes the account accessible to a household for which maintaining one would itself be a barrier, and the RuPay debit card issued with it, together with the accident cover the card carries and the overdraft available after satisfactory operation, is what makes the account usable rather than merely open.