CASHLESS

ECONOMY IN
INDIA

SIMRAN PRAKASH
2 ‘P’
1214-17-403-027
 TABLE OF CONTENTS

Chapters Topics Page No.

1 Introduction 1-3

1.1 Introduction 2

1.2 Need of the study 2

1.3 Objectives of the study 2

1.4 Research Methodology 3

1.5 Limitations of the study 3

2 Review of literature 4-7

2.1 Meaning 5

2.2 Definition 5

2.3 Importance 5

2.4 Benefits of Cashless Economy 6

2.5 Challenges of Cashless Economy 7

2.6 Review of Past Studies 7

3 Data Presentation, Analysis and Interpretation 8-23

4 Findings, Suggestions and Conclusions 24-27

5 Bibliography 28
 CHAPTER – I

INTRODUCTION

.1
1.1 INTRODUCTION

CASHLESS ECONOMY

A cashless society describes the economic state whereby the financial transactions are
not conducted with the money in the form of physical bank notes or coins but rather
through the transfer of digital information between transacting parties. Cashless
society have existed from the time when human society came into existence, based on
barter and other methods of exchange, and cashless transactions have also become
possible in modern times using digital currencies such as bit coin . However this
article focuses and discuses on ‘cashless society’ in a sense of a move towards and
implications of a society where cash is replaced by its digital equivalent in other
words legal tender (money) exists, is recorded, and is exchanged only in electronic
digital form.

Such a concept, has been discussed widely particularly because the world is
experiencing a rapid and increasing use of digital methods of recording, managing
and exchange of money in commerce, investment and daily life in many parts of the
world.

CASHLESS ECONOMY IN INDIA

Digital India is the flagship programme of the government of India. It was launched
on 1st July 2015 by Prime Minister Narendra Modi , with a vision to transform India
into a digitally empowered society and knowledge economy. ‘ Faceless, Paperless,
Cashless’ is one of the professed roles of digital India. Major progress towards this
goal was made in late 2016, When the government took steps to demonetize the
country. Now even small retailers and shop owners are using cashless models like
Patym , for transactions.

1.2 NEED OF THE STUDY

 The cashless economy needs to be present as a financial year of 2015

experienced the hefty amount of Rs. 21,000 corers just on the printing of the
cash into economy.
 The other need for cashless economy is that every shady transaction that is
left unrecorded will now come into the picture making India one of the
fastest growing economies in the world.
 A cashless economy is required to make transactions more convenient for the
layman rather than carrying the bulk of cash in the wallet along with plastic
money. .2
  Cashless economy is needed to reduce the taxes charged by the government
due to lack of funds in the government bodies.
 Cashless India is important because it will reduce the tax avoidance and the
money laundering cases subsequently resulting in benefits for the customers.
 Cashless is needed as 1 out of 7 notes present in the economy is fake which
result into the bad image of the economy.

1.3 OBJECTIVES OF THE STUDY

 To know the benefits of the cashless economy.

 To know the challenges of cashless economy.
 To know the impact of cashless economy in India.

1.4 RESEARCH METHODOLOGY

 Scope of the study

The study is limited to Cashless Economy in India only.
 Sample Size
The data was collected from 30 respondents
 Primary Sources
The data was collected through questionnaire method
 Secondary Sources
The study is based on secondary data collected from various web
sources, magazines articles published in different journals.
 Sampling Method
Simple random sampling method
 Tools of Analysis
For the purpose of analysis simple statistical techniques such as
averages and percentages are used

1.5 LIMITATIONS OF THE STUDY

 The project is prepared assuming that information provided by respondents is

correct and true
 The sample size is limited, it may not represent scenario of all people

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 CHAPTER - II

REVIEW OF LITERATURE

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2.1 MEANING

CASHLESS ECONOMY

Cashless economy is a system where any type of money transactions are done through
digital means like debit cards, credit cards, electronic fund transfer, mobile payments,
internet banking, mobile wallets and other newly evolved payment channels, this will
leave very little scope for flow of hard cash in economy.

There is a rule called Pareto 80-20; which says 80 per cent of problem comes from
20 per cent of causes, seems like government is also going by this rule. By just
making the economy cashless nation’s many problems like black money, corruption
high taxes, unemployment can be solved.

2.2 DEFFINITION

 Functioning, operated, or performed without using coins or banknotes for money

transactions instead using credit cards or electronic transfer of funds.
 Designating or of financial transactions handled as by means of credit cards, bank
transfers and checks with no money handed from person to person.

2.3 IMPORTANCE

The cashless economy as importance attached to it in following ways

 The cashless economy needs to be present as a financial year of 2015

experienced the hefty amount of twenty one thousand cores just on the
printing of cash into economy.
 The other need of cashless economy is that every shady transaction that is
left unrecorded will now come into picture making India one of the fastest
growing economies in the world.
 A cashless economy is required to make the transactions more convenient for
the layman rather than carrying bulk of cash in the wallet along with plastic
money.
 Cashless economy is needed to reduce the taxes that are charged by the
government due to the lack of funds in the government bodies.
 Cashless India is important because it will decrease the tax avoidance and the
money laundering vases subsequently resulting in the benefits for the
customers.
  Cashless is needed as one out of seven notes present in the economy is fake
which results in a bad image of the economy.

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2.4 BENEFITS OF CASHLESS ECONOMY IN INDIA

 Cost Reduction
Cashless system brings down the cost associated, with printing, storing and
transporting of cash.
 Risk Reduction
The risk of money getting stolen or lost is minimal. Even if a card is stolen or
lost it is to block a credit or debit card or a mobile wallet remotely.
 Convenient
The ease of conducting financial transactions is probably is the biggest
motivator to go digital. With the advent of digital modes, one can avoid queue
for ATM’s transact 24*7 and save time.
 Tracking Spends
Spending done via mobile or computer applications can be easily tracked with
a simple click. This allows users to keep a track on their spending and
manage their spending effectively.
 Increase In Tax Base
Traders, small business shopkeepers, and consumers regularly use cash as a
means to avoid paying service tax, sales tax, etc. However in cashless
economy where all transactions will be done through organised channel,
through banks and financial institutions, they can be monitored by the
government and proper actions will be taken against evaders. This will result
in more transparent transactions which in turn lead to fall in corruption in
economy of the country.
 Containment Of Parallel Economy
In a cashless economy it is easier to track the black money and illicit
transactions unlike cash based economy in which money does not come into
banking system. In case of digital transactions it is easy to track and monitor
suspicious transactions as all the records are available with banks.
 Financial Inclusion
At, present India’s low-income households credit through informal system,
through relatives or private lenders. Forcing them to shift to cashless payment
platforms instantly formalises this world of od informality and include them in
formal economy.
 Discounts
A lot of e-commerce websites offer huge incentives in term of discounts, cash
back, loyalty points to the customers for making digital transactions for
shopping online.
 .6

2.5 CHALLENGES OF CASHLESS ECONOMY IN INDIA

 More than 60% of Indian population belongs to rural religion. Almost a quarter of the
rural populace doesn’t have mobile phones and a large percentage of them are
computer illiterate. They are not comfortable for using mobile phones or
computers for transactions and rely on other people for help. This sometimes leads
to misuse of accounts and siphoning of funds so majority of rural mass prefer cash
over digital modes.
 About 90% of Indian labour market is informal. Majority being employed in
agriculture and manufacturing sector where daily wages is prevalent. Under such
circumstances the informal market is heavily cash dependent.
 India is a country were 90% of transactions are paid in cash because cash
facilitates making transactions anonymous, helping conceal activities from the
government in a way that might help agents avoid laws, regulations and taxes.
 Security is another big concern regarding cashless transactions. The Indian Computer
Emergency Response Team has reported a surge in number of incidents till
October 2016 with close to 39,730 security incidents .
 Though several companies have come up with inexpensive smart phones still they
are not affordable to most of the people on our country. Unless Indian
government provides necessary subsidy or affordable solutions cashless economy
would be farfetched dream.
 Digital India suffers from the threat of thefts and hacking of digital money
instruments. The ATM cards, debit/credit cards, Net banking solutions and even the
transactions websites of the financial institutions are hacked by the mischievous
who withdraw money by making clones and changing passwords. This has to be
taken care of before proceeding digital India mission.

2.6 REVIEW OF PAST STUDIES

 Saravjeet Singh (2016), in his study the need for cashless society is because it
is much more risky to conduct criminal transactions or avoid proper payment
of due taxes in a cashless society such violations are likely to be greatly
reduced, It eliminates the need to carry cash or plastic. Digital payments can
be made with a tap or wave of a smart phone depending on the technology
used. It would make it easier to loan or borrow money as with digital
payments lending and borrowing can be reduced.
 Harsh Gupta (2017), in his study Reducing India’s economy’s dependence on
cash is desirable for a variety of reasons. India has one of the highest cash to
gross domestic product ratios in the word, and lubricating economic activity
paper has a cost. According to a 2014 study by Tufts University, The cost of cash
 in India, cash operations cost the Reserve bank of India (RBI) and commercial
banks about 21000 crore annually.
 Ranvir jaiswal (2018), in his study, The asset quality has been the lowest for
Indian banks, Public sector banks have taken the biggest hit the high exposure
of public sector banks like SBI to corporate loans is one of the reasons for
stress of the asset quality . The gross of the net performing assets rose sharply
from 2% from 2007-8 to 4% this is major worry for banks.

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 CHAPTER - III

DATA ANALYSIS

AND

INTERPRETATION

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1. Are you aware of digital India?

Criteria No. of respondents % of

respondents
YES 30 100
NO nil
TOTAL 30 100

yes

no

The above pie chart shows the awareness of ‘Digital India’

ANALYSIS-

 According to 30 out of 30 members are aware about the digital India.

INTERPRETATION-

 30 out of 30 respondents that is (100%) respondents are aware of digital

India.

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2.Do you think making India cashless will uplift the standard of living?

Criteria No. of respondents % of respondents

YES 22 73
NO 8 27
TOTAL 30 100

yes
no

The above pie chart shows that ‘making India cashless’ will uplift the standard of
living or not?

ANALYSIS-
 According to the pie chart 22 out of 30 agree that making India cashless will
uplift the standard of living
 According to the pie chart 8 out of 30 disagree that making India cashless will
uplift the standard of living

INETRPRETATION-

 73 out of 100 (i.e. 73%) people think making India cashless will uplift the
standard of living
 27 out of 100 (i.e. 27%) people think making India cashless will not be able to
uplift the standard of living.

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3. Do you want to live in a digitalized city?

Criteria Number of respondents % of respondents

YES 17 57
NO 6 20
INDIFFERENCE 7 23
TOTAL 30 100

YES
NO
INDIFFERENCE

The above pie chart shows the number and percentage of respondents who want to
live in a digitalized city, who don’t want to live in a digitalized city and
indifference?

ANALYSIS

 According to the pie chart 7 out of 30 want to live in a digitalized city

 6 out of 30 do not prefer to live in a digitalised city
 7 out of 30 are indifference

INTERPRETATION

The above pie chart shows the percentage of respondents who want to live in a
digitalized city, who don’t want to live in a digitalized city and indifference?

 57 out of 100 (i.e. 57%) of respondents want to live in digitalize city

 20 out of 100 (i.e. 20%) of respondents don’t want to live in a digitalize city
 23 out of 100 (i.e. 23%) of respondents are indifference.

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4.Do you think India is completely ready for cashless economy?

Criteria Number of respondents % of respondents

YES 5 17
NO 25 83

TOTAL 30 100

YES

NO

The above pie chart shows that India is completely ready for cashless economy or
not?

ANALYSIS-

 According to the pie chart 5 out of 30 say yes, that India is completely ready
for cashless economy
 25 out of 30 say no, that India is not ready for cashless economy

INTERPRETATION

 17 out of 100 (i.e. 17%) of respondents think that India is completely ready for
cashless economy
 83 out of 100 (i.e. 83%) of respondents think that India is completely ready for
cashless economy.

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5.According to you what is the most important aspect to convert India digitally?

Criteria Number of respondents % of respondents

Literacy to rural people 4 13
Digital Education 2 7
Both 24 80
Total 30 100

literacy to rural
people
digital education

both

The above pie chart shows the number and percentage of the most important aspect
to convert India digitally

ANALYSIS

 According to the pie chart 4 out of 30 say yes literacy to rural people is the
most important aspect to convert India digitally
 2 out of 30 say digital education is the most important aspect to convert India
digitally
 24 out of 30 say, both are equally the most important aspect to convert India
digitally.

INETRPRETATION

 According to 13 out of 100 (i.e. 13%) of respondents, literacy to rural people is

the most aspect to convert India digitally
 According to 7 out of 100 (i.e. 7%) of respondents, digital education is the most
important aspect to convert India digitally
 According to 80 out of 100 (i.e. 80%) of respondents, both of them are equally
important to convert India digitally.
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6.Do you think rural people will be able to adopt the digital change in our country?

Criteria Number of respondents % of respondents

YES 16 53
NO 14 47
TOTAL 30 100

yes

no

The above pie chart shows the number and percentage of rural people will be able
to adopt the digital change in our country or no?

ANALYSIS-

 According to the pie chart 16 out of 30 say yes, that rural people will be
able to adopt the digital change in our country.
 14 out of 30 say no, that rural people will not be able to adopt the digital
change in our country.

INTERPRETATION

 53 out of 100 (i.e. 53%) of respondents, rural people can be able to adopt to
the digital change in our country
 47 out of 100 (i.e. 47%) of respondents, rural people will not be able to adopt
the digital change in our country.

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7.According to you which sector will get developed most after digitalization in India?

Criteria Number of respondents % of respondents

Agricultural Sector 4 14
Industrial Sector 3 10
Service Sector 10 33
All 13 43
Total 30 100

Agricultural
Sector
Industrial Sector

Service Sector

All

The above pie chart shows the number and percentage of which sector will get
developed most after digitalization in India?

ANALYSIS-

 According to the pie chart 4 out of 30 agree that Agriculture Sector will get
more developed
 3 out of 30 agree that Industrial sector will get more developed
 10 out of 30 say that service sector may get developed more
 13 out of 30 say all the sectors may equally get developed after digitalization
in India.

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INTERPRETATION

 14 out of 100 (i.e. 14%) of respondents, Agriculture sector will get most
developed after digitalization in India.
 10 out of 100 (i.e. 10%) of respondents, Industrial sector will get most
developed after digitalization in India.
 33 out of 100 (i.e. 33%) of respondents, Service sector will get most developed
after digitalization in India.
 43 out of 100 (i.e. 43%) of respondents, All will equally get developed after
digitalization in India.

8. After digitalization which area will become more convenient to you as compare to
the current services?

Criteria Number of respondents % of respondents

Transport Reservation 3 10
Shopping 3 10
Payment for petty 2 7
transactions
All 22 73
Total 30 100

Transport reservation

Shopping

payment for petty

transactions
all

The above pie chart shows the number and percentage of which area will become
more convenient compare to the current services?

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ANALYSIS

 According to 3 out of 30 respondents the area of Transport Reservations will

become more convenient compare to the current services
 According to 3 out of 30 respondents the area of Shopping will become more
convenient compare to the current services
 According to 10 out of 30 respondents the area of Payment to petty
transactions will become more convenient compare to the current services
 According to 22 out of 30 respondents the all the areas will become equally
more convenient compare to the current services

INTERPRETATION

 10 out of 100 (i.e. 10%) of respondents, Transport reservation will become

more convenient
 10 out of 100 (i.e. 10%) of respondents, Shopping will become more
convenient
 7 out of 100 (i.e. 7%) of respondents, payment for petty transactions will
become more convenient
 73 out of 100 (i.e. 73%) of respondents, All areas will become equally
convenient.

9.Do you believe the Government should take more to set up a cashless payment
infrastructure?

Criteria Number of respondents % of respondents

YES 24 80
NO 6 20
TOTAL 30 100

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 yes

no

The above pie chart shows the number and percentage of Government should take
more initiative or not to set up cashless payment infrastructure?

ANALYSIS

 According to 24 out of 30 respondents say Yes that Government should take

more to set up a cashless payment infrastructure
 According to 6 out of 30 respondents say No that Government should not take
more to set up a cashless payment infrastructure

INTERPRETATION

 80 out of 100 (i.e. 24%) of respondents, agree that the Government should
take up the initiative.
 20 out of 100 (i.e. 20%) of respondents, disagree that the Government shouldn’t
take initiative.

10.Do you believe minimising the use of printed bank notes will have the positive
impact on environment and help reduce crime?

Criteria Number of respondents % of respondents

YES 16 53
NO 14 47
TOTAL 30 100

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 yes

no

The above pie chart shows the number and percentage of respondents, minimising the
use of printed notes will have a positive impact on the environment and help reduce
the crime or no?

ANALYSIS

 According to 16 out of 30 say Yes that minimising the use of printed bank
notes will have the positive impact on the environment and help reduce the
crime
 According to 14 out of 30 say No that minimising the use of printed bank
notes will have the positive impact on the environment and help reduce the
crime

INTERPRETATION

 53 out of 100 (i.e.53%) of respondents, agree minimising the use of printed

notes will have a positive impact on the environment and help reduce the
crime.
 47 out of 100 (i.e. 47%) of respondents, do not agree that minimising the
printed notes will have a positive impact on the environment and help reduce
the crime.

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11. Which mobile payment apps do you use?

Criteria Number of respondents % of respondents

Paytm 29 97
Mobikwik Nil Nil
Oxygen wallet 1 3
All Nil Nil
Total 30 100

paytm
mobikwik
oxygen wallet
all

The above pie chart shows the number and percentage of mobile payment app used by
the respondent?

ANALYSIS

 According to 29 out of 30 prefer using Paytm for digital transactions

 According to 1 out of 30 prefer using Oxygen wallet for digital transactions

INTERPRETATION

 97 out of 100 (i.e.97%) of respondents, prefer using Paytm.

 3 out of 100 (i.e. 3%) of respondents, prefer using Oxygen wallet.

12.Do you think cashless transactions are more convenient than cash transactions in
daily life?

Criteria Number of respondents % of respondents

YES 19 63
NO 11 37
TOTAL 30 100
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 yes
no

The above pie chart shows the number and percentage of respondents, whether
cashless transactions are more convenient than cash transactions in daily life or no?

ANALYSIS

 According to 19 out of 30 Yes that Cashless transactions are more convenient

than cash transactions in daily life
 According to 11 out of 30 No that Cashless transactions are not more
convenient than cash transactions in daily life

INTERPRETATION

 63 out of 100 (i.e. 63%) of respondents, think that cashless transactions are more
convenient in daily life.
 37 out of 100 (i.e. 37%) of respondents, think that cash transactions are more
convenient in daily life.

13. Are you willing to switch to cashless transactions?

Criteria Number of respondents % of respondents

YES 22 73
NO 8 27
TOTAL 30 100

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 YES

NO

The above pie chart shows the number and percentage of respondents willing to
switch to cashless transactions or not?

ANALYSIS

 According to 22 out of 30 respondents want to switch, to Cashless Economy

 According to 8 out of 30 respondents do not want to switch, to Cashless
Economy

INTERPRETATION

 73 out of 100 (i.e.73%) of respondents are willing to switch to cashless

transactions.
 27 out of 100 (i.e.27%) of respondents are not willing to switch to cashless
transactions.

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14. What worries more to switch into cashless transactions?

Criteria Number of % of
respondents respondents
Security applications 4 14
Internet connection 5 17
Hackers activity 12 40
Nil
All of the above 9 30
Total 30 100

security appplications

inetrnet connection

hackers activity

lack of technology knowledge

all the above

The above pie chart shows the number and percentage, of what worries the
respondents to switch into cashless transactions?

ANALYSIS

 According to 4 out of 30 Security Applications worries more to switch into

Cashless Transactions
 According to 5 out of 30 Internet Connections worries more to switch into
Cashless Transactions
 According to 12 out of 30 Hackers Activity worries more to switch into
Cashless Transactions
 According to 9 out of 30 All equally worries to switch into Cashless
Transactions

INETRPRETATION

 According to 14 out of 100 (i.e. 14%) Security applications worry the

respondents to switch into cashless transactions.
 According to 17 out of 100 (i.e. 17%) Internet connection worries the respondents to
switch into cashless transactions.

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 According to 40 out of 100 (i.e. 40%) Hackers Activity worries the respondents to
switch into cashless transactions.
 According to 30 out of 100 (i.e. 30%) All equally worries the respondent to
switch into cashless transactions.

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 CHAPTER - IV

FINDINGS, SUGGESTIONS AND CONCLUSIONS

.24
 4.1 FINDINGS

1. Most of the people are aware of digital India.

2. Making India cashless will uplift the standard of living.

3. People in India want to live in a city where every work is digitalized.

4. India is not completely ready for cashless economy.

5.Literacy to every other rural people and providing digital education is very
important to convert India digitally

6.Rural people can ne able to adopt the digital changes only if they will be
given proper guidance of digital literacy and knowledge.

7.All the sectors will be equally developed after digitalization in India.

8.After digitalization all the areas will become more convenient compare to the
current services.

9.The Government should take more to set up a cashless payment infrastructure.

10.Minimising the use of printed notes will have a positive impact on the
environment and help reduce the crime.

11. Most of the people prefer Paytm to make payments digitally.

12.According to people cashless transactions are more convenient than cash

transactions in daily life.

13.Most of the people are willing to switch to cashless transactions.

14. Hackers activity worries the most to switch into cashless transactions.

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4.2 SUGGESTIONS

 Indian Government need to start providing digital literacy to every

other citizen.
 To create impact of Digital India to be realized, we have to use
technology to solve problems faced by Indians.
 Government should set up PPP forums in each of these segments to
invite industries to participate in areas where they have a domain
expertise and interest.
 The Government as set the stage with a strong vision and equally
strong show of will to make it happen. What we need now for them
is a focus on setting the right policy and framework and processes that
make it easy for industry to do business in India and encourage us to
participate in India’s journey towards becoming digital India.
 What is needed now is an unprecedented focus and the will to make it
happen across both government and industry.
 The one area where this kind of a model is needed with a high level
of urgency is in developing the culture of innovation in India.
 The Government must encourage open global standards that will enable
India to benefit from the best technology worldwide.
 The Government should focus on sustainable development and basic
facilities of rural area before providing them digital services. The two
have to go hand in hand.

4.2 CONCLUSION

As the country moves toward a cashless environment after digitalization, the

initial awe and confusion have given way to flurry of concerns. Will the
emphasis on online transactions provide convenience and tangible benefits or
just add to stress and additional charges?

To incentivise the move towards a cashless economy, the government has

come up with a rash of discounts and freebies on digital transactions. But will
these be substantial enough and along with other benefits counter the higher
risk of identity theft once the currency notes are back in circulation?

The Government is working on various levels to reduce the dependence on

cash even as ordinary citizens queue up for cash and economist are busy
estimating the extent to which economic growth will be hit because of the
on-going drive to replace high value banknotes there has been a lot of
discussion on whether the government can use the current situation to push
India towards a cashless future.

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Reducing Indian’s economy dependence on cash is desirable for a variety of
reasons. India has one of the highest cash to gross domestic ratios in the
word and lubricating economic activity with paper has costs.

To be sure Government on its part is working at various levels to reduce the

dependence on cash. Opening bank accounts for the unbanked under the and
adoption of director benefit transfer is part of the overall idea to reduce usage
of cash and increase of transparency.

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 CHAPETR - V

BIBLIOGRAPHY

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5. BIBLIOGRAPHY

 Cashlessindia.gov.in
 Cashless.gov.in/digital-payment-methods.html
 businesstoday.in/opinion
 http://www.livemint.com/Opinion/uzv0.html

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