There has been a lot of brouhaha over the Government’s recent bold step of Demonetisation. Comments have been pouring in since the 8th of November 2016, when the government decided to do away with the 500 & 1000 denomination notes, thus paving a way towards a cashless economy.
It is a bold step in the sense that it wiped out nearly 80% of India’s cash. Like everything else, this step to has pros and cons. Some have favoured it, others have condemned it.
Pros of Cashless economy
- No counterfeit currency.
Counterfeit currency in 500 &1000 denominations will be rendered useless. People who engage in corruption and allied practices generally hoard their wealth in cash. This hoarded cash will be of no use because of the note ban. If they deposit it in the bank, they will be questioned regarding the source of that income.
- There will be minimum theft of cash.
After the note ban, nobody would want to steal cash in 500 & 1000 Rupee notes. This will quickly stall the theft, as that money won’t be accepted anywhere but banks.
- Easier payment across the country.
People who want to transfer money to places across India can be done with more ease, via NEFT for instance.
With digitisation being initiated, every person will have to be digitally literate at some point, thus soothing their efforts in transferring money and making transactions more transparent.
- It will also help in widening the bracket of tax payers. People will have to give and receive their payments via cheques and online transactions.
Cons of Cashless economy
- Lesser literacy rate has been the top reasons for so many issues.
Making India digitally literate is not an easy task. There are places which don’t even get electricity and water, let alone computers and internet. A large number of population is based in the remote areas without these basic necessities. People here rely solely on cash. They can be conned if they have to rely on someone for online transactions.
- Another issue in implementation is the affordability, availability and efficiency of the devices which support online transactions, such as, computers, smart phones, Point of Sale devices. Only 15% of India’s population uses the internet. With such a meagre number of people being exposed to the internet, digitisation can’t be made universal, not at least in a short span of time.
- Corruption, despite being one of the points for digitisation, can’t be guaranteed to decline.
A person taking a bribe in cash right now might demand it in kind in the future, say a mobile phone, or a computer. This is merely a speculation.
- Cyber security: India will have to tighten its cyber security owing to the instances of hacking into banks and personal accounts occurring globally. A country like India, being at its nascent stage in terms of cyber security might be more vulnerable to such threats.
- Indians need cash every single day.
Ola cabs refused to take cash payments as their drivers started facing multiple challenges in their daily course. Currently, the eateries which accept debit and credit cards are higher priced. Things like cigarettes and tobacco aren’t available in shops which accept cards, and the ones who sell these things don’t have the resources or the infrastructure to get a Point of Sale device. Such small businesses will succumb to digitisation. This is just one example, there are myriads more.
- The Ministry of Electronics and Information Technology has launched DigiShala, a government-owned 24*7 TV channel to spread the awareness of Digital Payments.
- VISAKA – Vittiya Saksharta Abhiyan, is a campaign initiated by the Government of India, Ministry of Human Resource Development, for promoting Digital literacy.
- The first place to go cashless is a village named Palnar in Chhattisgarh. It has installed more than 1500 Point of Sale devices. This can be a good step in curbing thefts and extortions as this village happens to be a hub for naxalites.
- Grocery stores, local doctors, chemists and other essential commodities and service providers have been asked to install Point of Sale devices by the government.
Despite the government efforts India lags behind due to illiteracy, lack of technical knowhow, unequal incomes etc. Even if a person is willing to transfer the money online, the receiver should at least have a bank account, he should have that bank in his area, that bank should have the cash whenever a person needs to withdraw. These are only some of the problems faced by all many Indians on a daily basis.
In my opinion, there was no urgency for this bold step of Demonetisation. The government could have executed it in a much better fashion had it planned a few basic things which were overlooked, ignored deliberately, or simply not thought of. India can be a Less-cash country, but not a cashless one, at least in the near future.