Can India move towards Cashless Economy?Anisha Mukhija
Can India move towards a Cashless economy?
let’s see the Pros and Cons of the Cashless Economy
- 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.
- 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.
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.
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.
- 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.