What is JAM Trinity?

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03 Mar, 2015

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The term JAM has became part of the India’s finance world since it found place in two important documents recently – The Economic Survey 2014-15 and the Union Budget 2015-16. So what is JAM and why this term has suddenly become so important.

What is JAM?

JAM stands for three things – the Jan Dhan Yojana, the Aadhaar initiative of UIDAI and Mobile number. These three things are now often called the Trinity of reforms in India. The JAM Trinity holds the key to one of the biggest pieces of reform ever attempted in India, i.e., direct subsidy transfers. The NDA government is pinning its hopes on these three modes of identification ((JAM) to deliver direct benefits to India’s poor.

Why JAM has became so important?

Until now, the government has operated a multitude of subsidy schemes to ensure a minimum standard of living for the poor. These take the traditional delivery routes to deliver affordable products or services to them. So, we have the MGNREGA, operated through the panchayats, which pays minimum wages to rural workers. The Centre and States supply rice, wheat, pulses, cooking oil, sugar and kerosene at heavily subsidised prices through the PDS. Then, sectors such as power, fertilisers and oil sell their products to people below market prices. It is natural that such subsidies cost the exchequer quite a bit. Yet, as they make their winding way through the hands of intermediaries, leakages, corruption and inefficiencies eat away large parts.

It is here that the government is quite confident that the three constituents of JAM could be of immense help. With Aadhaar helping in direct biometric identification of disadvantaged citizens and Jan Dhan bank accounts and mobile phones allowing direct transfers of funds into their accounts, it may be possible to cut out all the intermediaries. Thus JAM Trinity has become such an important part of Indian economy that within launch of this terminology it has become immensely popular in financial circles.


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