Cashless visions

With the scramble for cash across the country growing more desperate, the question uppermost among the people is whether the Central government did its homework properly before its currency shake-up move. Fince Minister Arun Jaitley has called the demonetization ‘a logical step’ to push India into a cashless economy. He has argued that the Indian economy should not be having 12 percent of its GDP ‘in the shape of currency’, when the corresponding figure for developed countries is around 4 percent. Only when the currency supply is squeezed will the people get into the habit of using cheques, or better still, plastic or digital currency. In a country where businesses along with common people mostly use cash to avoid paying taxes, Jaitley believes some bitter medicine is in order to bring about a sea change in transaction habits, so that corruption and inflation can be fought and the parallel economy reined in. When it is pointed out to him that India is not the US where almost everyone writes cheques or swipes credit cards, the Fince Minister says that almost every Indian family now has a bank account thanks to the Jan Dhan scheme — so it is high time the people respond to the government’s drive to root out the black money mece.

From the opinions being voiced by members of the NDA government, cash is being sought to be painted as the villain that must be vanquished to frog-march the people from informal fince into the tax net and a formal, clean economy. So how will this cashless economy come about? Its votaries, particularly the e-commerce, fincial services and electronic payment sector, enthusiastically talk of an India where everyday transactions are conducted online, where people will soon scale up from credit, debit and prepaid cards to e-wallets in which money is pre-loaded to make payments. They point to Prime Minister rendra Modi’s commitment to a Digital India and rapid smartphone penetration countrywide as the basis for their projections. They have noted with approval the government’s initiatives like the Unified Payments Interface (UPI) allowing transactions across bank accounts through Aadhaar number or virtual address, and the Bharat Bill Payment System (BBPS) to facilitate digital payments in the country. In fact, companies like Paytm, Ola Money, Razorpay, MobiKwik and Itz Cash have reported huge rise in customer traffic after the PM’s announcement scrapping high denomition cash.

But considering the terrific convulsions the country’s economy is now undergoing, inevitable accusations are flying that the government has been too hasty in pursuing its cashless vision. As the earlier Atal Behari Vajpayee-led NDA government discovered at great political cost, there is a big Bharat outside enclave India. This is a country with an economy functioning at several tiers, where only an estimated 28-32 percent of the population has easy access to fincial institutions. Crores of bank accounts for poor people have been opened, it is true. But most Jan Dhan accounts remain zero balance, which only goes to show that whatever money the account-holders are having is just not enough for them to step into bank portals. For the illiterate, it is too much to expect they will learn to negotiate overnight the bank paperwork; and even if literate, many are not technologically savvy to carry out cashless transactions. And despite all the commendable work towards fincial inclusion, around 60 percent people in the country still don’t possess a debit card. And for those who have, the general pattern is to use debit cards to withdraw cash from ATM kiosks and use it to make purchases or clear bills. Many people adamantly hold on to their cash because it makes them feel secure, and it will need much convincing for them to switch over to debit cards. But the huge debit card security breach last month in several banks across the country prove that the Indian banking system still has far to go in ensuring foolproof cyber security and data privacy for customers. As for internet connectivity, many experts believe the digital infrastructure is still not up to the mark to bring about a cashless economy. But the biggest problem will be to convince, if not force, businesses and retailers across the country to install point of sale (PoS) machines at their counters where customers can swipe their cards. After all, they too have grown used to cash and avoid paying taxes. India cannot go cashless unless the private sector comes on board in a big way.