Can India move towards Cashless Economy?

Can India move towards Cashless Economy?

Can India move towards a Cashless economy?

let’s see the Pros and Cons of the Cashless Economy

Pros:

  • Transactions can be completed with the touch of a button, saving time.
  • Helps the government keep track of all financial transactions.
  • Makes International transfers significantly more convenient.
  • The issue of counterfeit currency will be eliminated.
  • Cashless transactions give the consumers proof of payment. It can be used in case of disputes.

Cons:

  • People from low-income families are frequently vulnerable to numerous online scams.
  • The cashless economy has yet to take root in our country’s semi-urban and rural areas.
  • The technology we utilize is still vulnerable to hacking.
  • Technical issues in banking can halt access to money.

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Challenges to Cashless Economy

  • More than 60% of the Indian population lives in rural areas.
  • Approximately 90% of the Indian labor sector is informal and mainly cash reliant.
  • A quarter of the rural population does not own a cell phone, and a big proportion of them is computer illiterate.
  • The possibility of theft and hacking of digital money instruments exists in digital India.
  • Mischievous people hack Net Banking solutions, Debit/ Credit cards, ATM Cards, and even transaction websites of financial institutions and banks.

Overcoming the Challenges

  • Before embarking on the digital India agenda, digital security must be addressed.
  • Implement the notion of a cashless economy on a smaller scale and observe how it works in rich urban areas. Once the concept gains popularity, it may be implemented on a bigger scale.
  • Targeted incentives will persuade individuals and businesses to abandon cash. This might be accomplished by lowering the cost of digital payments, instituting cash-handling fees, or prohibiting the usage of cash over specified thresholds.

Note: There is still a long way to go before India becomes entirely cashless, and initiatives must be done to enhance penetration in each of these sectors.

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Central Bank Digital Currency

  • The Reserve Bank of India (RBI) is developing its own digital currency, known as the “Central Bank Digital Currency (CBDC)” in India.
  • The CBDC in India will be the digital equivalent of the rupee.
  • Cryptocurrencies were introduced a few years ago, and they offered several benefits over traditional currencies.
  • They were unregulated and have various additional flaws.
  • In order to capitalize on blockchain technology, numerous countries (like India) are developing their own state-issued digital currencies.

Steps were taken by the Government of India

  • GOI agreed to waive the fee for BHIM, UPI, and debit card transactions up to Rs. 2000
  • Demonetization has boosted the use of e-wallet services.
  • The Government also held a Digi-Dhan campaign in which 16 lakh fortunate winners (merchant and users) received rewards ranging from Rs. 1000 to Rs. 1 Crore.

Conclusion

  • Although the cashless economy appears to be highly promising, we must address issues such as banking the unbanked, banking illiteracy, and digital illiteracy in order to go cashless.
  • We need easier ways to educate people about the significance of cyber security and protect them from online scams.
  • Central bank digital currency has the potential to transform the system.
  • The introduction of a central bank’s digital currency can aid in the fight against financial crime.
  • India is undoubtedly on its way to becoming cashless, but the cashless economy will have to wait for a while.
  • With a number of efforts, the goal is to simplify the economy and reduce corruption.

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