DIGITAL INDIA AND CASHLESS

ECONOMY
 INTRODUCTION
The government gave its approval for Digital India A programme to transform India
into digital empowered society and knowledge economy. This is a follow up to the key
decisions taken on the design of the programme during the meeting of the Prime Minister
on Digital India Programme on August 7, 2014, and to sensitize all ministries to this vast
programme touching every corner of the government. This programme has been
envisaged by Department of Electronics and Information Technology (DeitY)

VISION :The vision of Digital India aims to transform the country into a digitally
empowered society and knowledge economy. The programme will be implemented in
phases from the current year till 2018. The Digital India is transformational in nature and
would ensure that Government services are available to citizens electronically. It would
also bring in public accountability through mandated delivery of governments services
electronically, a Unique ID and e-Pramaan based on authentic and standard based
interoperable and integrated government applications and data basis.
 The vision areas of Digital India
Infrastructure as Utility to Every Citizen

Governance and Services on Demand

Digital Empowerment of Citizens

 Infrastructure as Utility to Every Citizen
(i) High speed internet as a core utility shall be made available in all Gram
Panchayats.

(ii) Cradle to grave digital identity - unique, lifelong, online and authenticable.

(iii) Mobile phone and Bank account would enable participation in digital and financial
space at individual level.

(iv) Easy access to a Common Service Centre within their locality.

(v) Shareable private space on a public Cloud.

(vi) Safe and secure Cyber-space in the country.

 Governance and Services on Demand
(i) Seamlessly integrated across departments or jurisdictions to provide easy
and a single window access to all persons.
(ii) Government services available in real time from online and mobile
platforms.
(iii) All citizen entitlements to be available on the Cloud to ensure easy access.
(iv) Government services digitally transformed for improving Ease of Doing
Business.
(v) Making financial transactions above a threshold, electronic and cashless.
(vi) Leveraging GIS for decision support systems and development.
 Digital Empowerment of Citizens
(i) Universal digital literacy.
(ii) All digital resources universally accessible.
(iii) All Government documents/ certificates to be available on the
Cloud.
(iv) Availability of digital resources / services in Indian languages.
(v) Collaborative digital platforms for participative governance.
(vi) Portability of all entitlements for individuals through the Cloud.
 Scope of Digital India
(i) To prepare India for a knowledge future.
(ii) On being transformative that is to realize IT (Indian Talent) + IT (Information
Technology) = IT (India Tomorrow)
(iii) Making technology central to enabling change.
(iv) On being an Umbrella Programme covering many departments. The programme
weaves together a large number of ideas and thoughts into a single, comprehensive vision,
so that each of them is seen as part of a larger goal. Each individual element stands on its
own, but is also part of the larger picture. The weaving together makes the Mission
transformative in totality.
(v) The Digital India Programme will pull together many existing schemes which would be
restructured and re-focused and implemented in a synchronized manner. The common
branding of the programmes as Digital India, highlights their transformative impact.
 Cashless Economy: The Future Ahead
Demonetization:
* It is an act of scrapping the legal tender status of a currency note. When new currency is
introduced to replace the old one, government demonetizes the old currency.
* The Currency notes of Rs. 500 and Rs. 1000 which constituted nearly 86% of the whole
money circulation in the country, were demonetized on November 8, 2016. The main
objectives of demonetization are: To curb black money and corruption. To combat
inflation. To encourage cashless transactions. To check hawala transactions to counter
terrorist activities.
 The main objectives of demonetization were
* To curb black money and corruption.
* To combat inflation.
* To encourage cashless transactions.
* To check hawala transactions
* To counter terrorist activities.
 Current Position
The cash centric informal sectors like agriculture, real estate, etc., have been
affected by demonetization. However the experts say that it's a short term
scenario and this move will give positive long term consequences.
To bring the economy on track again, government is promoting cashless economy
because scrapping of cash needs an alternative to cash. India's black money has
been estimated by the World Bank in 2010 to be worth about one fifth of the
GDP. In a country where 90% transactions are carried out on cash basis it was a
revolutionary move to transform from cash to cashless transactions.
In 2014, the NDA government announced Jan Dhan Yojna to increase the
financial inclusion of those who never had an account in a bank. Under this
scheme, 250 million bank accounts have been opened in two years. As per RBI
reports bank branches increased by 5% per year but ATMs, debit cards and card
swiping machines have doubled in four years and online transactions have grown
20 times in six years to 2016. All these data shows a gradual shift towards
cashless economy. Demonetization has sped up this transition.
 Cashless Economy
Cashless Economy can be defined as a situation in which the flow of cash within
an economy is non-existent and all transactions must be through electronic
channels such as direct debit, credit cards, debit cards, electronic clearing, and
payment systems such as Immediate Payment Service (IMPS), National Electronic
Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) in India.\
India remains to be a very cash reliant economy than any other country in the
world. By adopting the policy of demonetization, the government has put the cash
economy out of gear in the hope that more and more people could be brought into
the cashless economy. A cashless economy will show many positive effects on the
economy
 Indian Scenario
Indian economy is primarily to be driven by the use of cash and less than 5% of all payments
happen electronically. This is largely due to the lack of access to the formal banking system for a
large part of the population and as well as cash being the only means available for many. Large and
small transactions continue to be carried out via cash. Even those who can use electronic payments,
use cash.
Indians traditionally prefer to spend and save in cash and a vast majority of the more-than 1.2
billion population doesnt even have a bank account.
Indian economy is primarily driven by the informal sector and it relies heavily on cash based
transactions.
A report by Google India and Boston Consulting Group showed that IN 2015 around 75% of
transactions in India were cash-based while in developed countries like USA, Japan, France,
Germany etc. it was just around 20-25%.
RBI estimates for July 2016 show that banks had issued around 697.2 million debit cards and 25.9
million credit cards to customers after deducting withdrawn or cancelled cards. However, cards on
their own cannot turn the economy into a cashless one. It is Important to note that the number of
cards in operation is not equal to the number of individuals holding those cards. It basically means
that many customers hold multiple accounts and cards.
Positive aspects of cashless economy-I
Clean and more transparent business transactions and money transfers.
It will increase the taxation base. It will also reduce the instances of tax
avoidance.
It will curb the parallel shadow economy (black economy) which runs majorly on
cash basis. Cashless transactions are trackable and more transparent.
Efficiency in welfare programs as money can be easily transferred to the accounts
of the recipients.
It will eliminate the role of intermediaries who usurp the share of welfare money
spent on people.
Reduced money laundering due to easy traceability of transactions. This cashless
regime represents transparency and people will get all the benefits directly in their
account without paying any bribe to any one.
Positive aspects of cashless economy-II
Improved financial inclusion and credit access through the linkage of
all welfare activities with bank accounts. It will not only increase
welfare for the people but would assist in creating a sense of
belonging and faith in the banking system.
Control on the issuance of fake currency and counterfeiting. (An
estimated 250 out of every million Indian Bank notes were fake).
Good Governance.
Improved climate for foreign investments. In the year 2015, RBI spent
Rs. 27 billion on currency issuance and management. Cashless
economy will reduce such costs.
 Towords less cash economy
The Prime Minister has reiterated that India should move towards a less-cash
society as a stepping stone towards becoming a cashless society.
A number of countries including Sweden, Kenya and Brazil have successfully
moved towards a less-cash economy. Their experience shows that less-cash
economy needs supporting regulations ensuring security of online transaction,
robust infrastructure and customer centricity.
Steps taken to motivate people and seek their attention towards various digital
modes such as:-
Lucky Grahak Yojana for consumers and Digi Dhan Vyapar Yojana for merchants:
BHIM (Bharat Interface for Money)
RuPay
Aadhaar Payment App:
Vittiya Saksharta Abhiyan
 CHALLENGES AHEAD-I
Cashless economy cannot be achieved in few days or months, it is a
long process. People have to be prepared to adapt this change.
In a country like India where poverty, illiteracy and unemployment are the
major issues, cash in hand symbolized safety, security and respect.
Government should assure the basic necessities and focus on developing
infrastructure specially in rural areas.
Special drives through schools, colleges, panchayats etc. can help create
awareness about cashless/banking transactions.
Financial Literacy is a must for bringing more and more people to digital
platform. Digital payment or payment through banks, instead of paying cash
should be encouraged.
 CHALLENGES AHEAD-II
Linkage of all welfare activities with bank account is very appreciative
step.
According to an estimate, urban areas contribute about 70% in GDP.
So, initially more focus can be given to urban areas to make them
cashless, where infrastructure is already developed. Rural areas can
be covered gradually.
A strong banking base is the basic prerequisite for the cashless
economy.
Cyber safety of the internet. Lack of which creates fear even literate
people are not comfortable in doing money transactions online.
Global Experiences and Way Forward
If Countries such as Kenya and Nairobi can successfully move towards less cash
economy, India can also move towards such an economy by increasing the use of
technology based innovative payment products.
Mobile payment wallets and mobile applications that support online transfer of
funds are a key alternative. This is particularly useful for small business or non
corporate players who do not accept cards or have point of sale terminals.
In Sweden most street vendors and small businesses have adopted payment
application and PoS card reader. Similarly in Kenya, which is one of the biggest
uses of mobile money in Africa, M-Pesa is used for paying fees and bills and even
receiving salaries.
The village of Ibrahimpur in the state of Telangana has become completely
cashless by having bank accounts, using payment gateways and credit cards.
Other villages too can replicate the success story.
 REMARKS
In short run the move can slow down the economic growth and may
cause some transactional inconvenience to consumers and producers.
But With a clean and transparent economy everybody will get the
fruit of development.