Is India Ready To Be A Cashless Economy?

Date:   Wednesday , June 15, 2016

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Money, irrespective of shape or form, has facilitated trades and transactions between us since ancient times. It\'s an obvious importance that has been witnessed throughout ages, and across geographical borders. Over the years, money and monetary transactions have evolved with time, enabling smooth and efficient negotiations between various parties involved. Technological advancement in recent times has contributed in creating smoother monetary transactions through various electronic networks.

The economic stability of a nation can greatly influence the amount of cash flow generated across different sectors; industrial or otherwise. With constant development and innovation, many sectors have witnessed growth, which in turn played a major role in developing the economic well-being of the country. Major money transfers are now being done by electronic transaction facilities which have made trading as well as general buying and selling of goods easier. Advancements like these are also helping developing nations in gaining recognition and economic importance all over the world, one of them being India.

India is currently one of the fastest growing economies in the world. According to a report by the World Bank, India\'s Gross Domestic Product (GDP) is being anticipated to grow up to 7.5 percent in 2016. Another report by Goldman Sachs, an international investment banking firm, states that India\'s growth potential could reach eight percent in the next four years, helmed by greater technological advancement, urbanization and substantial access to banking facilities for all. The continuous economic development of India has also attracted many investment opportunities from all over the world.

Observing and supporting this constant advancement, the Government of India has hinted towards making India a Cashless Economy, as a part of its Digital India blueprint. A cashless economy refers to a system in which flow of cash within an economy is invisible and intangible. All monetary transactions in such economies are facilitated through various electronic mediums like direct debit, credit & debit cards, e-wallets or virtual wallet, digital currency and others. Through a cashless economy, all kinds of transaction records can be maintained regularly on a digital platform. This can prove to be an advantageous factor in regulating and curbing the flow of money in the black market as well as illegal and underground economies.

Many steps are being taken to infuse cashless monetary solutions in India. The Reserve Bank of India (RBI) has made announcements regarding the same, enabling better cashless transaction facilities mainly towards rural areas. The major banking institution, which is also responsible for controlling all policies regarding the Indian rupee, has recently made some announcements in favor of promoting e-payment methods in small towns. They have also presented a concept paper for the same for enabling electronic transactions across various sectors, specifically in Tier III to Tier VI cities.

The National Payment Corporation of India (NPCI) had launched the RuPay card scheme on March 2012, which was aimed at promoting multilateral payment systems in India. The card system was created as an alternative to Visa and Master cards, which would also strengthen the transaction and payment system in India. Another system launched by the NPCI is the Unified Payment Interface (UPI), which is aimed at creating a single payment window for various services. The Bharat Bill Payment System (BBPS) is another example of innovative electronic payment. Through this system, citizens can access bill payment services assisted by a network of various agents, availability of multiple payment methods, and instant acknowledgment of payment.

One of the major reasons for promotion of a cashless economy is to check tax evasion and tax fraud. The latest Union Budget of India has also announced various technological initiatives to curb tax evasion and control cash flow through intelligent data analytics. Setting strict rules and regulations, as well as constant evaluations are instrumental in creating a secure cashless economy for all those involved.

However, many variables have to be considered to create a digitally literate society and a cashless economy. The union cabinet has also approved of steps taken to promote and create awareness about cashless transactions, which will also include mandatory card-based or electronic payments beyond a prescribed threshold. Other steps taken by the cabinet include withdrawal of any extra charges currently imposed on card or digital payments.

Validating and revolutionizing the move to achieve a cashless economy in India, many dynamic payment options have been made available by private businesses as well, with an aim to create better electronic transaction methods and provide a secure ecosystem to every person. Nowadays, it is quite common for people to opt for online payment for almost all kinds of services. Continuous technological innovation on this front has assisted in empowering the nation manifold.

Being one of the fastest growing economies in the world, India seems to be at the forefront of economic innovations. Over time, via technological advancements and Government support, it can be concluded that India is gearing up for a digitally enabled cashless economy - and it will happen much sooner than what is anticipated, and that too on a significant scale.