Is India Ready for a Cashless Economy?

Cashless India is a government initiative led by Prime Minister Narendra Modi to reduce India's dependency on cash and bring hidden black money into the banking system. This move towards a cashless economy began when the government demonetized old Rs 500 and Rs 1000 currency notes on November 8, 2016.

The goal is to encourage more digital transactions using debit cards, electronic transfers, mobile payments and Internet banking. This shift aims to make financial transactions easy, safe and more transparent while also modernizing India's economy.

A cashless economy means all money transactions will happen digitally with the use of debit cards, electronic transfers, internet banking, mobile payments, mobile wallets and other modern payment methods. This reduces the need for physical cash in the economy. Why don’t you try the dhankesari and get the money directly to your bank account on winning?

The following are the reasons:

• To address black money in the economy.

• To reduce the amount of cash circulating in the country that is directly linked to corruption.

• To eliminate dodgy funds and fake currency used by terrorist groups to finance terrorism in India.

• The initiative is expected to remove more than Rs 5 lakh crore of black money from the economy.

What is a Cashless Economy?

A cashless economy is nothing but a situation where there is no physical cash flow within the economy. Instead, all transactions will happen electronically. This includes using credit and debit cards, direct debits and electronic payment systems like IMPS, NEFT, and RTGS in India.

Why Should India Transform into a Cashless Economy?

India should move towards a cashless economy. Check out the reasons below.

Cash is expensive:

Printing currency and managing ATMs costs a lot of time and money. The Reserve Bank of India (RBI) spends Rs. 32.1 billion on printing currency alone. Paper money also needs to be replaced after a certain time which adds to the expense. Running a cash-based economy directly costs about 0.25% of India’s GDP.

Cash fuels the shadow economy:

Cash transactions are hard to track which makes it easy for people to do illegal things like tax evasion and dealing with black money. Recent data shows that Indians hold more cash than bank deposits which contribute to an estimated 15 to 16 lakh crores of black money. This unaccounted money funds illegal activities like terrorism, vote buying, smuggling, betting and trafficking.

Promotes financial inclusion and boosts tax revenues:

Moving towards a cashless economy requires everyone to have a bank account. This increases financial inclusion which makes sure that more people can access banking services. It also makes transactions more transparent which drastically reduces opportunities for tax evasion. You can try the Probo app to boost your earnings with opinion trading. Government schemes can better reach beneficiaries by ensuring that they receive proper support and assistance.

These changes aim to make the economy more efficient, transparent and inclusive which will benefit both individuals and the country as a whole.

What are the Measures Taken by the Indian Government?

Demonetisation:

The demonetization drive will not effectively reduce black money but push India towards a cashless economy. It aimed to bring about radical reform in this direction. Following demonetization, Paytm experienced a surge with 5 million daily transactions compared to their usual three million. Overall traffic spiked by 700% and money added to accounts increased by 1000% in the first two days. Ola Money also saw a 1500% rise in its e-wallet usage during this period.

The government of India has taken several other steps in recent years to reduce people's dependence on cash apart from demonetization which are as follows:

Pradhan Mantri Jan Dhan Yojana:

Launched in 2014, this initiative is one of the largest financial inclusion initiatives all over the world. It is a national mission aimed at comprehensive financial inclusion and ensures that banking services reach every household in the country.

The scheme provides basic savings accounts, access to credit based on need, insurance, and pension services. It has been instrumental in opening bank accounts for many low-income individuals which improves their access to essential financial services.

Direct Benefit Transfer (DBT):

The Government of India launched a scheme to directly transfer benefits and subsidies from social welfare programs like LPG subsidies, Old Age Pension, Scholarships, and MGREGA into beneficiaries' bank accounts. This initiative aimed to introduce digital banking widely in rural India which makes sure that people could access their funds more conveniently and securely.

Unified Payment Interface (UPI):

It is a system that combines multiple bank accounts into a single mobile app from any participating bank. This integrates various banking features, seamless fund transfers, and payments to merchants in one platform which simplifies digital transactions. Through UPI, monthly transactions had increased from zero to 754 million in under three years.

GST:

The introduction of GST has motivated businesses to choose digital payments over cash.

Financial Literacy Centres:

The RBI and Finance Ministry set up Financial Literacy Centres (FLCs) as part of PMJDY. These centres will offer programs to educate people about banking services and their advantages which aim to increase awareness and understanding among the public.

The RBI has issued licenses for new-age small finance banks and payment banks. These banks are expected to enhance financial inclusion and introduce innovative banking solutions. In addition, initiatives such as e-banking, debit and credit cards, card-swipe machines (PoS), and digital wallets have facilitated the shift towards a cashless economy which makes electronic transactions more accessible and convenient.

Wrapping Up:

As part of the Digital India program, the idea of a cashless economy aims to make India more digitally advanced through a cashless economy. This means using methods like cards, mobile wallets, UPI, AEPS, and USSD for transactions instead of cash.

These options have become popular as they offer convenience and security. By embracing these digital payment methods, India is moving closer to becoming a cashless society. This shift not only promotes financial inclusion but also supports the country's goal of digital empowerment for all citizens.