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5 things to know about India’s journey to a cash-less economy
It has been more than three months since the government announced the demonetization of the Indian currency. In addition to the eradication of black money, the aim of this drive was to convert India into a less-cash economy. Here are five things to know about India’s journey to a less-cash economy:
After-effects of demonetization:The number of digital transactions increased by 400-1000% after the announcement of demonetization, according to a report by Times of India. But over the past month, this sudden surge seems to have come down to a more stable level. This is due to an increase in the circulation of currency in the system.
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India vs. The world:India has a long way to go if it wants to match global levels of digital payments. Currently, India has 1 Point of Sale (POS) terminal to be used by around 900 people, as per a Kotak Securities report. In comparison, the global average for number of people per POS terminal is 100. The value of digital transactions in India is around Rs 1.8 lakh crore. This is comparable to other major countries like Italy and Mexico, as per the Kotak Securities report. However, at Rs 67,000, India still performs poorly in terms of per capita transaction value.
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Proper infrastructure essential:Increase in digital payments is necessary for a successful journey to a less-cash economy. This can be possible with an increase in mobile and internet connectivity in the country. The government should invest more in proper infrastructure to achieve this goal.
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Journey will take some time:The transition from cash to digital is not simple. Developed economies like the UK and Sweden took decades for this transition. The demonetization drive gave a major push in the right direction. But greater inclusion of rural and urban poor is necessary to expand the digital footprint.
Vision document by the RBI:The RBI highlighted seven ‘A’s for a successful transition to a less-cash economy. Accessibility, Availability, Awareness, Acceptability, Affordability, Assurance, and Appropriateness .Existing technological advancement in India can ensure a faster transition compared to other less-cash economies.
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To conclude:The demonetization drive has certainly propelled India towards a less-cash future. However, this is only the beginning. The government and the people should collectively participate to realise this vision.
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