The Union Fince ministry says it is now pumping in Rs 500 along with smaller denomition notes, after ‘aggressively’ circulating Rs 2000 notes initially to replenish quickly the value of money in the system. Economic Affairs Secretary Shaktikanta Das has also claimed that more than 2 lakh ATMs across the country have been recalibrated, and that rural areas facing cash shortage are being identified. The four presses of the Reserve Bank at Dewas, shik, Mysuru and Salboni are said to be churning out all the currency denomitions at full swing. And well they must, because the Rs 2000 note is proving to be an albatross around the neck for both parties in any business transaction. Experts have pointed out that if the Rs 2000 note is to be broken into smaller denomitions, then it cannot be more than half the amount in circulation because the other half has to be made up by the smaller change. But across Assam as elsewhere in the country, people are still hunting frantically for Rs 500 and Rs 100 notes. Youths on two-wheelers are chasing after cash vans carrying smaller denomitions, and passing on the message through social media to friends about ATM kiosks with the desired currency notes. The RBI has already announced that it will be bringing out Rs 50 and Rs 20 notes in new series, but it is anybody’s guess when the situation will ease up. The Economic Affairs Secretary has stated that in the last 5 weeks, three times the normal yearly supply of smaller denomition notes have been supplied. However, judging from local media reports, people in suburban and rural areas in Assam are getting only rare glimpses of new Rs 500/Rs 100 notes, which is hampering small businesses greatly. The biggest question is whether the government will fully replace the high-denomition currency that made up 86 percent of total currency by value (or Rs 14 lakh crore). If it does, the scramble for new cash will likely stretch to April-July next year. Till that time, the thinking in government circles seems to be that the cashless mode will take on in the country in a big way.
To encourage this transition, the NITI Aayog has even announced a lottery with daily, weekly and mega awards for consumers and merchants making digital transactions. NITI Aayog CEO Amitabh Kant has pointed to some of the progress towards this end since the Prime Minister’s surprise November 8 announcement — card swipes in PoS machines of shops and businesses jumping 95 percent, e-wallet use by 271 percent, RuPay card payments by 316 percent, and both UPI and USSD by about 1,200 percent. How eagerly the urban lower middle and lower classes take to the cashless option remains to be seen, but the government has a massive challenge on its hand in rural areas where card penetration is minimal and ATMs few and far between. Can India take a leaf out of Kenya’s book by pinning faith on mobile phones then? However, Kenya’s example is unique — where women-headed households have responded far better to mobile-money services, with thousands of agents pushing its flagship M-PESA services on the ground. The upshot has been that nearly 2 lakh Kenyan households have been lifted out of extreme poverty. The Government of India will have to devise its own paradigm to get people start using digital money for small, daily purchases. Reportedly, the Centre is pushing for an Aadhaar-ebled payments system (AEPS) that may emerge as an altertive to online and card transactions. It will be a card-less and PIN-less system, with the authentication to be done by scanning fingerprint or iris pattern of the user. The Unique Identification Authority of India (UIDAI) has been tasked with developing a mobile app to eble this transaction mode. Since the mobile phone penetration in the country has already crossed 82 percent, the government is expectedly upbeat about popularizing mobile money. But for this vision to materialize, the level of mobile phone hardware security must be foolproof, as a user’s password and even fingerprint can be stolen. In this context, our planners need to take the cyber security aspect very seriously, as a joint study by Assocham and research firm EY has recently warned that the country is likely to witness 65 percent rise in mobile frauds next year.