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To Be or Not To Be Cashless, That Is the Question

Should India go cashless or not is the most debated topic after demonetization of high value currency notes in India. The government is pushing for increasing the share of cashless transactions in the economy so that “less cash” remains in circulation in the economy.

The government hopes to curb black money transactions by the operators of the shadow economy, who are flush with unaccounted cash and make them join the mainstream economy.

It seeks to eliminate corruption by bringing down the cash transactions to the minimum.

It also expects netting higher tax revenues and obtaining funds for development purposes.

The cost of printing currency notes, wastage in the form of soiled or damaged notes after a few years and rendering them invalid because of demonetization is indeed too high. This cost comes from the citizens and if it can be saved, it is welcome.

The biggest gain is that it eliminates all opportunities for criminals, terrorists and enemy agents to print fake notes and destabilize the economy.

Cashless transactions spare the masses of fake coins and small denomination currency notes also, which is a great nuisance to the people and a cause for many a friction in the market between the consumer and the shopkeeper.

Under the pretext of small change not being available, the auto & taxi drivers cheat the passengers, and the shopkeepers handover toffees for the change.

Cashless transactions eliminate all these unhealthy practices from the country.

Opposition to the move comes from the leftist ideologues in the country, who say that there is no country in the world which is 100% cashless, barring one or two exceptions. They say that the sheer size of India makes it impossible to shift to cashless economy instantly. Poverty, illiteracy, lack of infrastructure to serve total cashless transactions, poor developmental infrastructure in the hinterland like round the clock power supply and need of small cash for ease of daily transactions are some of the grounds for them to voice their opposition. They are right in voicing public concerns, but not 100%.

In spite of all these problems, the country can’t postpone forever the beginning that needs to be made now.

If the government has begun the process, it deserves to be supported. Well begun is half done is an old wise saying. India has launched itself in a big way into cashless transactions.

I can hazard a guess that it will take no more than 24 months for a major portion of the Indian economy to become cashless, for the benefits far outweigh the hiccups.

Once it becomes easy for even the illiterate to transact smoothly with a mobile phone it will replace physical currency because of the bother to keep it and protect it from robbers, cheats and petty criminals.

It will become popular among the working class population for they will get full wages paid to their account without getting shortchanged by the employer.

Women will welcome it as they will get paid equal wages for equal work and also manage their personal earnings better than entrusting it to their husband or other male members in the family, who are not always innocent of breach of trust.

As it is not going to become 100% cashless immediately, there should be no fear of harassment to the people.

Government will need to ensure a hassle-free & stout implementation of the transition from cash to cashless economy. It is no easy task for the government because it has to ensure engagement of people who can solve problems rather than create problems as at present.

The discredited culture of the inspector raj, artificial shortages and black marketing should not resurface. This point has to be emphasized after witnessing the banking harassment and civil disgruntlement on 29th & 30th November, 2016 of a people who had whole heartedly supported the demonetization, standing in long queues from morning till evening without being able to draw cash from their bank accounts on the pay days. This was too much of a price to pay for demonetization. It revived the days of the decades of the 1950s through the 1980s when shortages compelled people to stand in the queues for everything from drinking water from the public hydrant to grains/essential items from the Fair Price Shops.

If it continues for some more weeks, things will be the same again and corruption will again be the order of the day, howsoever differently clad. The government risks total credibility even with the best of intent.

One of the essential features of a cashless economy is the stability in the value of money. It is a sovereign guarantee against arbitrary, authoritative, stupid and dishonest acts of the rulers of the time leading to erosion of the value of the money. How many times has the US Dollar suffered overt or covert devaluation? Compared to it, the Indian currency has been repeatedly devalued against the dollar and its purchasing power has suffered repeated assaults. Housewives depositing their “streedhan” accumulations of more than 6 decades show crisp currency notes in the denomination of rupee 1, 2, 5, 10, 50 and 100 so carefully saved by them and which are of no value in real terms today! There were times when a rupee got 4 cups of tea for the intellectually oriented leftist/socialist kind of the unemployed at the market tea vendor’s stall. A 10 rupee note could get vegetables for the family for one full week. Except for archival value these 1 or 10 rupee notes mean nothing more for the housewife today.

Digital currency can be reduced to nothing in a moment even before the public comes to know of it. There is no dearth of cheats in the market place, whether equity market or non-banking finance companies, chit fund like Sardha of West Bengal or Sahara of UP, real estate developers or others. Why should the citizen trust Paytem or its several other versions with her money? There is no guarantee that they will not disappear without even a trace as the chit funds or fly by night operators on the bourses. Can the sovereign stand guarantee for them and ensure people that it will compensate the citizen fully in case of any financial bungling by the digital fund managers, native/foreign/joint? If not, the scheme will be looked at with justified suspicion.

That distrust between the sovereign and the people is a strong ground for the common man to continue with the tried and tested traditional methods to keep one’s money in gold, silver, diamond, real estate and cash rather than going completely cashless.

Unless the country reaches the stage of the stability of the dollar or devises ways to safeguard the value of the people’s money kept in digital form in the bank,  cashless transactions alone to the exclusion of cash transactions is fraught with great dangers.

But if the cashless system takes firm roots, the people will manage their affairs themselves.

India will be known more for transparency, clean economy and high integrity instead of corruption once the nation adopts cashless transactions.

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