MAYANK DIMRI
The demonetisation of Rs 500 and Rs 1,000 notes announced by Prime Minister Narendra Modi on November 8 was a bold move, and the decision received an overwhelming response from the public. The complete failure of Bharat Bandh on November 28 and the election results of municipal corporations in Maharashtra, Gujarat and Chandigarh have come as a boost to the Government’s move.
The Government is now seeking to transform India through digitalisation. By digitalisation, the Government can provide services that meet the evolving expectations of citizens and businesses even in the period of tight budgets and increasingly complex challenges. E-banking, e-wallets and other modes of cashless transactions are becoming popular. As of March 2016, the Reserve Bank of India declared that the number of debit cards floating in the economy was 661.8 million, while 24.5 million credit cards had been given to bank account holders.
Renowned economist Jagdish Bhagwati, recently suggested in a blog that the demonetisation drive may well yield significant benefits. He said, “This one-time demonetisation itself could have long-term beneficial impact by nudging reluctant consumers into e-payments, whose transparency will ensure greater tax compliance and a higher permanent tax base.”
The cash-crunch crisis presents a clear window of opportunity for India to march towards a more digital and less-cash economy. The Government has identified digitalisation and encouragement of less cash transactions as a cornerstone in the fight against black money. It is certainly the best way to eliminate the creation of black money. It becomes difficult to generate black money when the money is accounted for. Physically carrying and stashing away black money will now become more difficult not just because of the weight and volume but also because the actual value of currency in circulation will be less than what it used to be earlier.
On December 8, Union Minister for Finance Arun Jaitley announced new measures such as discount of 0.75 per cent on petrol and diesel prices if the payment is made through digital means, discount of 0.5 per cent on monthly seasonal railway tickets in case of digital payments, insurance cover of Rs lakh for rail passengers who buy tickets online, NABARD support to Regional Rural Banks and co-operative banks to issue Rupay Kisan Cards to 4.32 crore Kisan Credit Card holders, and many more, in order to encourage digital payments and accelerate India’s move towards digital economy.
The Jan Dhan-Aadhaar-Mobile trinity and less-cash initiatives are the backbone of far-reaching reforms, development and a growth agenda. It is encouraging to see, since the demonetisation drive, the number of smaller merchants such as tea stalls, grocery stores as well as consumers in rural and smaller cities embracing digital payments through mobile wallets, point-of-sale machines etc.
The *99# service by the Government has the potential to have a bigger impact in minimising the immediate disruptions caused by demonetisation and can serve as a milestone for rural India. It provides functionality to transfer and receive up to Rs 5,000, and supports multiple Indian languages. The *99# service is a good beginning to go cashless. Based on GSM Association projections, Smartphone penetration in India is set to increase from about 275 million in 2016 to 670 million by 2020. Indians must now use the demonetisation drive to harness its innovation and political capital to ensure those who are on the wrong side of the digital and socio-economic divide, especially in rural Bharat, can effectively function in a less-cash society. Recently, in the wake of Prime Minister Narendra Modi’s call for a cashless economy, all CBSE-affiliated schools will now go towards digital mode of transactions from January, 2017.
It seems that India has chosen a Prime Minister who is willing to take political risk to fulfil his promise of removing corruption. He has taken this risk because he believes the move can help India to leave behind the culture of illegality.
(The writer is pursuing his Masters from University of Delhi)