To start things off it’s better to give you a look over what is a cashless economy. As the name suggests in this economy the role of cash is not evident. In a cashless financial system the transactions are not based on bank-based or paper forms of money or as we know cash. This way of trade was in use by our ancestors before money was in the markets. People would just trade their goods with other goods and then other forms of valuable entities like gold found their way into the economy. In a cashless financial system payments are digital and people use credit cards, debit cards, bank and other payment systems offering virtual transfers and digital wallets. Here in this article we answer to the question that is India ready for cashless economy?
India with the large population of 1.3 billion people seems to be a hard country to see a smooth transition in any kind of system running in the country. Furthermore it is hard to see India ready for a cashless economy. However, just a few years ago only 2% of the whole payments were non-cash in India. However today you can see great changes and see India’s name in articles considering the cashless economy. This is due to the country’s new attitude towards cash and newly installed systems with the help IT. We will inspect the two major systems here in this article briefly to give you an insight into this changing India.
Before mentioning the two major systems in India it is worth mentioning that before 2009 that over half of the population did not have identifications. In that half there were cases that even did not have birth certification. In any country, in this case India a form of legal identification must be there to do many things. If you do not have any form of ID then you can not open a bank account, get business license, driver’s license or insurance. Not being able to use the services the government has to and does provide its subjects that will take opportunities away from you. Now back to the changes we mentioned; there is the first change, Aadhaar. These two helped greatly for India to be ready for a cashless economy.
This program was launched in 2009 in India. Aadhaar is a biometric database based on a 12-digit digital identity, authenticated by finger prints and retina scans. Due to India’s large population and the high rates of application this program became the largest and most successful IT project ever. This was a great change into a huge system. Now that billion much population with no identification have more than just an ID; a digital proof of identity. But was Aadhaar alone? No India Stack is the next topic we will inspect furthermore into how it helped India be ready for a cashless economy.
The new digitized India in 2016 added India Stack to complete the rush to a functioning digital world. With India Stack people can store and share data through a series of secure and connected systems. These data can be anything from addresses to bank statements. All this access of data is done via Aadhaar to get the complete use of the former system changing program. With India stack and Aadhaar at people’s use they can easily open a bank account, buy funds, share data all around the nation. This great service through these two systems are done only with a fingerprint or retinal scan that does not need literacy that might be a concern for a changing digital economy and/or society. With the help of India Stack and Aadhaar India is more ready for a cashless economy.
It can be said that India has done is still doing what’s necessary to get ready to become a new nation with no cash involved. Indian government has had a great role in getting India ready for a cashless economy. With the use of two important and functional programs mentioned it is evident that there is the will to a great change. When a great change is coming governments can be the facilitators that the change needs. India has its government behind this change fully. Here we discuss the role of government in making India ready for a cashless economy and transition into a cashless society.
Prime Minister Narendra Modi has shown that he wants these new changes. In 2016 Prime Minister Modi with his “cash ban” tried to demonetize the country. This action was done with the move to remove (and gradually recycle) 86% of the cash in the Indian economy. This very cash ban policy and the action following it forced the people to go to the digital systems and ways of payment. An economy that relied 98% of its transactions and trades on cash now is getting ready and its only with the immense will behind the idea supported buy the government.
Benefits of Being Cashless
It is known to all of us that a new idea and movement has good and bad points to it. Just like any other new idea a cashless economy pros and cons are there for us to decide if we are willing enough or not. Here we get to the benefits a cashless economy and society can bring us.
With the changes brought by Prime Minister Modi’s cash ban many opportunities emerged as remedies to existing problems. One of the greater problems that stopped India’s growth was its banks’ non-performing loans. Yet the cash ban helped the banks to recapitalize that resulted in flow of more than $80 billion in the banking system. Furthermore, Telecommunications and technology sectors are awaiting such growth with greater opportunities that emerge day by day and the trust this growth has brought for investors. Now when such policies and changing attitude and digital based systems can help India that seemed far away from becoming a cashless economy, It is only fair to see what other goods are in store.
Whatever material form we give to money it is going to cost us in many ways. It costs us in making the physical form of the money. The transportation and storing it can cost us heavily. The security of these physical financial assets can be tricky as well. The use of paper in making cash and the great deals of hours and human resources to produce and keep it safe is what we are talking about. Yet in a cashless economy there is no need for these costs.
If they steal your wallet with cash in it the cash is gone forever. Now with credit and debit cards and many other forms of digital wallets you can simply block the users out of your accounts. Although there are problems with digital security but with digital hygiene and keeping your devices up to date the risk can get to almost zero.
Watch Your Spending
With just clicks away you can keep track of your spending habits. This can help you watch your budget and manage your spending. There are also many in-app limitations that can help you with bad spending habits.
The digital world might have had many security breaches but the security features weigh more. There are black money at play in almost every economy. Now in a cashless economy based on technology and digital payment systems the room to launder money is close to zero. Moreover, all transactions are traceable and that makes it hard for criminals to make illicit use of the money in play in the economy. Many criminal activities can reduce due to the cut of their funding with the black money.
No Tax Evasion
In a cashless economy evading taxes can become impossible. In a normal economy where cash still is at play evading the taxes is pretty easy. Unfortunately, today small businesses, shopkeepers and traders can use cash for their transactions and sales and keep their business easily off the records. This way there is no record of how much they actually made to pay taxes based on. But in a cashless economy all transactions are digital and through the right channels. The banks and other financial institutions can monitor the transactions and this leaves no room for error. We can avoid many other illicit uses of money by the transparent transactions in a cashless society.
Even to this day there are still individuals who rely on their family’s money and this can only leave them financially unidentified. A financial identity can be made with the digital world of payments and money transactions where you have to earn your own money and keep track of it. Even if there is easy money involved the account holder will be completely responsible for the account and those assets can’t be spent in illegal sectors.
To make a transaction anywhere and anytime of the day or night with just a few clicks sounds pretty awesome. There is no way someone would not want a easier and more secure way to move their hard earned money. Today with the great number of applications life has become only easier. You can easily purchase any kind of goods from your bed and pay for it. Now if there is no cash the same ease is at play with even more convenience for you in store. In this fashion a cashless economy does not sound so bad after all. Now let’s get back to the question at hand and let’s see if India is ready for a cashless economy.
Is India Ready?
There are many information and static data that suggests India has the potential to be the first cashless economy for sure. So the answer is yes to the question that is India ready for a cashless economy. More than that is the will behind this change. Prime Minister Modi made clear that he wants to see this transition through with policies and actions at play. Prime Minister Modi even asked his fellow Indians to let those who are a little behind in terms of technology know about these changes and how to use them.