The Curious Case Of Jan Dhan Balances: They Rise During Polls And Fall Thereafter

In 1926, economist George Taylor propounded a theory that hemlines of women’s skirts rise when the economy is doing well and go down in a downturn. In what Taylor would no doubt have found to be a curious phenomenon, the amount of money in Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts seems to rise during elections and ebb thereafter.

While the balance in these accounts had been rising steadily during the polling phase — and not because of any payouts connected to welfare schemes — it slowed down appreciably after the elections. .

Indeed, even as the final phase of polling was under way, the total balance in these no-frills accounts had begun to dwindle.

According to government data, the increase in total balance was only a nominal ₹3-20 crore per week in May 2019.

In the previous months, the situation was different. For instance, in March and April, the increase was substantial. During that period, the balance increased by ₹800 crore to ₹1,000 crore a week. In terms of total balance, PMJDY accounts had ₹93,567 crore as on March 6. This peaked to a record high of ₹99,751 crore on April 17. By May 22, it fell to ₹98,434 crore.

This cannot be dismissed as an isolated trend during the general elections, going by data. A similar trend also began in October 2018, shortly before elections to five State Assemblies.

Up to August-September 2018, the balance in the accounts was increasing at the rate of ₹600-800 crore a month. In October 2018, before Assembly elections began, there was a ₹4,474-crore jump. In November, however, there was a sudden dip.

From December again, there was a steep rise in the total balance, and it has since been steadily increasing. For instance, from December 2018 to January 2019, the balance went up by ₹2,438 crore, followed by ₹3,207 crore and ₹3,476 crore in February and March, respectively.

Is it possible to see any correlation between changes in the balance and the funds being deposited in the PMJDY accounts as part of welfare schemes?

“Not entirely. Other than a few new schemes such as Kisan Samman, the amount of which could be ascertained, all others such as Atal Pension Yojana have regular payments. This rules out any possibility of sudden upsurge or high volatility,” a top executive at a major state-owned bank told BusinessLine.

“There have been internal enquires but given the scale of these accounts a macro and micro investigation of trends and funds flow could be of use,” he said on condition of anonymity.