Jan Dhan, Aadhaar, Mudra: Making women a visible part of Indian growth story

In the Indian context, studies related to credit accessibility of women show that relative access to institutional credit of rural women may be limited vis-a-vis their urban counterparts…

If you thought there is no prize for guessing what JAM (Jan Dhan, Aadhaar and mobile in policy parlance) stands for, then you are mistaken. Using a large random sample of Jan Dhan and Mudra accounts opened by the State Bank of India (SBI) between August 2014 and March 2016, we found an enabling traction across Jan Dhan, Aadhaar and Mudra loans—this is our terminology for JAM.

The logical corollary is a discernible evidence of women empowerment through JAM by allowing them to have better access to credit. We also found that in states with high women literacy, there were more inward remittances, irrespective of gender, and concomitant cash withdrawals.

First, let us take up the issue of women empowerment through JAM. The UN defines women empowerment as the process by which women take control and ownership of their lives through the expansion of their choices.

In general, women empowerment indicates an increase in economic, social, spiritual and political strength, boosting their self-esteem, enlarging their decision-making power and allowing them better access to resources. All this leads to a positive attitude after all.

One proxy for women empowerment is the status of rural women in India. Rural women play a significant role in the life of the society, and national development is not possible without nurturing this segment. In the Indian context, studies related to credit accessibility of women show that relative access to institutional credit of rural women may be limited vis-a-vis their urban counterparts.

In our study, we found that there is indeed traction, though limited, across Jan Dhan and Mudra accounts—primarily in the shishu category of loans, that is loans less than R50,000. Interestingly, if we apply the same percentage of the SBI overlap ratio—that is people having both a Jan Dhan account and a Mudra loan—to the aggregate Jan Dhan accounts opened till date, then we have close to 100 lakh Mudra account holders with a Jan Dhan account.

The good thing is that 23% of Mudra loan account holders with the SBI are women with an average ticket size of around R55,000. Alternatively, this implies that most of the women account holders have taken loans under the shishu category only. In contrast, 65% of the Mudra loan account holders are men with an average exposure of around R87,000, of which there is a good chunk from the economically backward classes.

But the most remarkable finding was the distribution of women entrepreneurs across India, with 36% of the accounts coming from southern India (Andhra Pradesh, Tamil Nadu and Telangana) and 16% from eastern India (West Bengal, Odisha and Assam). Maharashtra, Gujarat and Madhya Pradesh accounted for another 17%. Thus, it clearly seems that states that were laggards in terms of economic growth in the past are seeing more traction in women entrepreneurship through the Mudra route.

In terms of the average exposure amount for women entrepreneurs across states, results were even more interesting. On an average, in most of the states as mentioned above, activities were related to grocery and kirana stores, retail shops and even public utility services. But in some of the smaller states like Uttarakhand, Jammu and Kashmir, Nagaland, Mizoram, Himachal Pradesh, Arunachal Pradesh and even eastern states like Bihar and Jharkhand, the average exposure was significantly higher than the national average. It is possible that though limited in number, loans may have been availed by women in such states for activities like buying trucks, cars for passenger and freight transport, given the inhospitable terrains which necessitates the need for an efficient transport infrastructure.

In this context of empowering women, an analogy may be drawn directly to the self-help group or SHG-bank linkage programme—often considered as the ultimate benchmark in women’s empowerment and socio-economic development. Loans like the ones under the Mudra scheme are analogous to micro-finance and remain a powerful tool for development as it brings down the capital and the operating costs and helps women entrepreneurship blossom from mere superficiality to productivity.

Now coming back to our second major finding: Nearly 35% of the total inward remittances in the SBI sample are also from states with high women literacy rates, of which 25% are below the age group of 45 years. Similarly, 48% of the cash withdrawal—with a larger probability of women withdrawing cash from their accounts compared to their male counterparts—also comes from such states. This clearly indicates that the inward remittances sent by their male counterparts are possibly being put to more productive use by the female folks, facilitating independent decision-making.

To sum up, it has been now been well-researched that investing in women’s capabilities results in the well-being of the family, especially children. The experience of the successful SHG-bank linkage is a case in point in the Indian context. There is no harm in emulating this in the context of better Mudra loan targeting by using the Jan Dhan account interface. As our results show, even as women entrepreneurs, specifically the rural ones, are somehow using the Mudra route, we must encourage them even more.

This can be achieved by better targeting using Big Data analytics. For example, states with high literacy across women may be specifically targeted for more of Mudra loans. Simultaneously, the government must think seriously about creating a database of women entrepreneurs across states pursuing similar activities.

This will create a successful Mudra-bank linkage. After all, as the SHG example shows, women save more, repay on time and promptly attend SHG meetings. This is all we need for making women a visible part of Indian growth story.

Soumya Kanti Ghosh is chief economic advisor, Kajal Ghose is head of analytics, SBI. Views are personal