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Going cashless in India

Er Neeraj Dubey
Generally there is always a presumption in Political Science that in every ideal democracy, i.e a ‘Welfare State”, the Government of the day will always take steps and measures which are necessary for the welfare of the people. Therefore, the decisions of the Government are generally for the public good, but the means and mode used for their implementation determines the nature of the policy. Reducing the volume of cash transactions in a society surely has its advantages to any economy. Even a developing country like India can hugely benefit from reduced cash transactions and a move towards digital payments. One of the current scenarios India is undergoing is the cashless economy Our Prime Minister Narendra Modi is aiming on. We are aware that recently our Government banned the usage of old Rs. 1,000 and Rs. 500 notes. This was done in 2 ways: – a) By making the public being able to deposit the old notes in banks. b) By stopping the withdrawal of old notes from ATM’s. Ensuring the above said things take place in order, the government also started issuing the new Rs 2000 notes through banks and ATM’s. By announcing a ban on the old Rs 1,000 and Rs 500 notes and by putting a cap on withdrawals from banks and ATMs, Prime Minister Narendra Modi floated the idea of a cashless society. But is India ready for a cashless society yet? While online transactions will allow the government to keep a check on payments and lessen the possibility of black money in the economy, is it feasible to be dependent on online transactions rather than cash payments in India? While transactions of higher amounts may be done through cards, shopkeepers are unwilling to use soft money for transactions which of a lesser amount. The above said process was neither an easy task nor a time savvy one. The whole process of demonetization has resulted in a cashless India where every common man struggled/struggles to make even a normal purchase on a daily basis. A few difficulties in taking up the change in a day to day level are: –
* People suffered a lot because of Cashless ATM’s during the initial stage of this process.
* In both the cases, Government set a limit to withdraw which was again a problem since withdrawing money every time in such a chaos was a nightmare.
* While online transactions were still a good chance, purchasing for lesser amounts in normal shops was a great problem.
* Internet transactions might have been done by many, but there are so many people in India (especially rural areas) who do not even know what an online transaction is.
* Even if we think about going for online transactions, Internet usage cost is considerably high in India which is again an issue in having Internet Connection in every home.
It will be too early to adjudicate the effect of the demonetization decision of the Government because monetary and economic policies are generally planned for seeking long term gains and therefore they are implemented in phase wise manner. Therefore, I would say that this demonetization decision is only one of the several steps of a larger economic measure which the Government is trying to implement. Lastly, demonetization decision has certainly proven beneficial in terms of eradicating the counterfeit and duplicate notes from the economy. But when it comes to eradicating black money, this decision needs to be supported by taking additional steps like imposing stringent tax laws and action against the benami properties and more emphasis on cashless transactions. Only then it will have the desired impact. The Prime Minister has declared his intention to take these actions and the Finance Minister has also hinted of taking steps in promoting cashless transactions. Therefore, the success or the failure of this policy is dependent on further additional steps. Encouraging people to go cashless after announcing a ban on notes is like starving people and then telling them how to go on a diet. The recently launched Unified Payments Interface (UPI) by the Reserve Bank of India (RBI), which uses Aadhar identification and one’s mobile number to make payments, is set to revolutionize payments systems in India. Waiting to take off into this seamless and modern payments world are new credit/debit cards, e-wallets and other mobile based payments (such as Airtel Money, PAYTM). Here are some of the problems which stand in the way of India becoming a cashless society.
Cyber security: In October 2016, the details of over 30 lakh debit cards were feared to have been exposed at ATMs. It was believed that the card and PIN details might have been leaked due to which customers were advised to change the PINs of their ATM-cum-debit cards. Stringent steps issuing new cards were also taken. Just a month later, the PM is motivating people to move to a cashless society. Is the cyber security in place? While a card is cloned, it takes several months to recover someone’s hard-earned money from the banks. How can people be assured that swiping cards at small shops and vendors will not be a risk to revealing our card details?
Network connectivity: Since the day demonetization was announced, people are trying to use more of card transactions to save that dreaded trip to the bank and to save the last penny of the hard cash in hand. However, a sudden surge in card transactions has led to connectivity issues. Several people have faced trouble while standing in line to pay for a transaction at a shop when the card machines have stopped working due to an overload on the network. Connectivity issues must be resolved before dreaming about a cashless society.
Internet cost: The internet cost in India is still substantially high. There is no Wi-Fi at public places and if people do not get their monthly data packs recharged, there is no way they can be connected to make online payments. Internet connectivity is needed even for the e-wallets. In order to convince people to do cashless transactions, the cost of the internet should be lowered and free Wi-Fi should also be provided at public places.
Smart phone affordability: Several companies have come up with new and inexpensive phones but they are still not affordable for most of the population in the country. More affordable options should be launched by the government for people to buy smart phones for cashless transactions.
Internet blockage: States like Jammu and Kashmir often face crackdown where the internet is the first thing that is blocked. In such circumstances, neither is it possible to use cards for transactions nor is it possible to use e-wallets. Any alternatives there?
Are banks ready? A cashless society needs a proper infrastructure. The banks need to be fully equipped to handle the surge in e-transactions. Infrastructure is also needed in terms of opening more accounts in the banks.
A cashless society is a welcome idea but not without preparation. There is a precursor to taking such steps without which a move such as this would be more harmful that being beneficial. A cashless society, for now, seems like a distant dream but a less cash society can be appreciated.
(The author is a Sr Faculty (CSE)-GCET Jammu)


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