From cash to less cash to cashless: Going digital
The decision of the NDA Government to move to a digital economy is welcome. The recent initiative of the National Institution for Transforming India (Niti Aayog) to script a roadmap to take India to a less-cash and then cashless economy, will be a vital step towards digitising financial transactions. To expedite this process, the Niti Aayog has formed a 13-member committee headed by the Chief Minister of Andhra Pradesh, Chandrababu Naidu, and his counterparts from Madhya Pradesh, Sikkim, Odisha, Maharashtra and Puducherry, along with top professionals, including former Unique Identification Authority of India chief Nandan Nilekani. The inclusion of Nilekani as a special invitee to the panel will give a big boost to the Government as he has rich experience of unfolding the grand Aadhar card system across the country. This panel will identify ways and means to promote digital payments, mainly in the rural areas, where mostly people deal with cash.
Also, the mapping of numerous global best practices, as terms of reference of this high-powered body, will help prepare a pragmatic plan to roll out a slew of measures in the Indian context. Besides, the current digital payment systems through debit card, credit card, pre-paid card, digital wallets/e-wallets, Internet banking, unified payments interface and banking apps, which are being made more active than before, should ease the problems of the people to a big extent. Meanwhile, the Niti Aayog panel's decision to reach out to the public, and make them aware about the benefits of digital economy, will drive away fear of demonetisation. Today, the problem lies not only in non-availability of cash in banks, but also in identifying an effective administrative mechanism to guide financial institutions like the banks and even the post offices, where most of the public transactions take place. As experts say, plans for a ‘cashless economy’ will provide a policy stimulus in the coming Budget for the country. While outlining the benefits of the demonetisation programme, Pranjul Bhandari, the chief economist of HSBC India said: “A back of the envelope calculation indicates that the gains would be around Rs1.3 lakh crore. Half of this could be from additional tax on undeclared income, and half from currency in circulation that does not return.” Though some economists believe the gross domestic product could dip (figures vary from estimate to estimate), the situation will improve once the printing of currency and the latter’s availability pick up.
However, it has to be made mandatory by the Government that people open their bank or postal accounts. They must then be given debit or credit cards. The informal sector, where a huge labour force is being employed at the moment, should be brought under a formal banking system. Once this is done, the online payment system will have to reach the rural markets, where the demand for cash remains a permanent problem in the current scenario. But then, Internet connectivity will have to be strong enough so that people can shop online without any hindrance. Obviously, the digitisation of the entire economy will be a hard task. But the determined way in which the Government is going about the task, there is hope that eventually the transition will be happen.