The narrative around the demonetization has changed to towards “Cashless Economy” from Black money, following the liquid cash crunch after the old 500 and 1000 notes ceased to be legal tender. The government has announced several incentives for going cashless along with mobile wallet companies showering discounts and cashback for every digital transaction.
Service tax on transactions up to Rs 2000 stands quashed. The stringent two-step verification is relaxed. Discounts on fuel purchases, new insurance policies from public sector firms, train tickets and highway toll, have been announced. Banks have issued RuPay Cards to lower payments made to Visa and Mastercard for their services, and since then 29 crore cards have been issued. UPI is also here to aid the transactions. Several moves have been taken.
Banks earlier last year have issued RuPay Cards to lower payments made to Visa and Mastercard for their services, and since then 29 crore cards have been issued. UPI is also here to aid the e-transactions. Several moves have been taken, are being taken.
However, switching from a 90%+ cash-oriented economy to significantly cashless, in a country of 1.3 billion people, is an extremely difficult task. The incentives offered by the government help but will make very little difference, although welcome difference. What is needed is a CLEAR and BIG incentive e.g. 5% discount on ALL eTransactions with the government making efforts to put the digital infrastructure required in place, Maharashtra Government has made its intentions clear, has also launched “MAHA wallet”, other state governments need to follow, tax breaks have to be given to companies that carry out all-digital transactions. And an “attack on all fronts” strategy is required to make this switch.
We need to put all Banks, Bank Correspondents on a war footing, to train and educate their village on ePayments. Financial literacy is of paramount importance for this to succeed. They need to actively help and encourage villagers with adopting electronic means on trade.
We should do all this even if it means that government have to bear the cost because in the process we would be better off and save a lot of money. It is estimated that Rs.18,000 crore is spent to maintain ATMs, and through the process,even if a quarter of ATM withdrawals are cut by the switch to cashless payments, banks could use the savings to reach the unbanked millions and still lower digital transaction costs.
As a consequence, it would mean that, we could bring about change in spending habits, widen the tax net, be able to protect consumer rights better, see improvement in the quality of goods as there is electronic trail of every purchase made, more value-addition, more revenue to the government, increased social infrastructure spending, and hence growth and development.
When a Kenya can do that with their mobile payments, why not an India?