Cashless India: Reality or myth?

After the demonetisation move, the government has been persistently pushing for a cashless economy. Of late, a number of incentives like service tax exemption, reduction in toll duties among others have been put in place by the government as a goodwill sign for cashless economy.

In this article, we will understand various aspects associated with the cashless economy.

  • What is a cashless economy?:
    • An economy where the usage of cash for daily payments, big or small is considerably low or has even zeroed.
    • The modes of payment include cards( e-wallets, online/mobile banking, Point of Sale machines , RFID tags among others.

Image result for cashless economy

  • What are the advantages of cashless economy?:
    • Lesser hoarding of cash , thereby, reducing the chances of accumulation of black wealth.
    • Reduced printing costs of notes due to reduced demand. Currently,RBI and commercial banks have to bear a cost of Rs.21,000 crores in note printing and handling.
    • No illegitimate practices like over-invoicing and under-invoicing which is a major cause of accumulation of black wealth at smaller scales.
    • Increased tax compliance, and thus, better revenue generation.
    • Transparent transactions, thus, lesser risk of tax evasion.
  • What are the concerns associated with cashless economy?:
    • Digital literacy is pretty low.
    • Phishing and data theft
    • Encryption and data protocolàstandards not par with excellence
    • Providing content in regional language.
    • Smartphone penetration is still to catch the required pace.
    • Internet connectivity is also on a lower side.
  • What could be done to induce a cashless regime?:
    • Security infra and technology like encryption need to be developed at par with the developed nations.
    • End to end encryption to prevent messages being read in transit.
    • Instant hot-listing to prevent UPI(Unified Payment Interface) accounts being looted.
    • NOFN(National Optical Fibre Network) and digital infra need to be penetrated well in the rural areas.
    • Digital Saksharta campaign for digital literacy.
    • Databases for all the transaction must be secured of theft and hacks.
    • Grievance redressal mechanism at the level of banks
    • Proper authentication is must and UPI should conform before carrying out any transaction.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s