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Merits and demerits of cashless economy

Cashless economy in layman terms signifies all transactions are being done digitally based on point of sale machines, where movement of physical money is minimal. Thanks to Sri Narendra Modi,the hon'ble PM of our country for taking such unquenching step with an aim to curb blackmoney ,reduction in corruption from grassroot level and demolishing Hawala like evils that still exist in some pockets. On 8,Nov of the very last year he decided to demonitise Rs.500 and Rs.1000 notes in general circulation declaring them as they are no long in tender.To avoid transactional dilemmas cashless transaction system was launched. An unbiased discussion on such an issue celibacies both positive points and negative points as well.

Merits of Cashless economy

Major advantage could be cited as no problem of counterfeit currency, as someone will be able to do so by mitigating bans of handling cash. Second, the theft nuisance from handful cash will be minimum. Third, there will be fewer mismatches of paper currency and on other side production of goods and services which can delimit inflation (too much price chasing too few goods). Third, payments through distant places become easier. But there is no one to one relationship between cashless system and corruption. For instance Germany, whose Corruption Perception Index (CPI) scores around 81 in a cash intensive economy and in Kenya, the same accounts for 25 for cash extensive economy, both are not comparable. Most important thing determining benefit of cashless economy solely lies with the socio economic condition of any state. It must evolve from very structural set up. From USA, India must learn a thing. Cashless promotion was there from 52 years but it was a gradual process, which took due time to acclimatize from all sections. But in India it was all of a sudden.

Enhanced digital economy and digital commerce can amend its pace. Improvement in tax compliance can be seen since most of private sector companies adulterate their balance sheets when it comes to submit their receipts and statements at audit time. Paper works are not at par immune to provide a genuine data regarding annual turn over but cashless transactions can keep a copy of the same if datas are merely secured by certified cyber agencies.

Demerits of Cashless economy

Literacy is a big vagary in our country. According a recent survey conducted by ASER( Asserted school education report), 50.6% of class 5th students are unable to perform class 2nd algebra. Anyone intended to go cashless need to be well acquainted with its pros and cons. One should be in a state to afford those devices which perform cashless transactions. In such stages demonitisation will only promote avoiding wastage of economic prosperity , upto some extent corruption but has nothing to do with setting up a cashless economy.Money earned out by devious means may albeit covinnance of political and administrative sects to perform their task harmoniously. But payments to corrupted influenced, tax evasion and base erosion in profit shifting (BEPS) is not fully achieved.

A logic arises when a moment comes when the production amplifies so much that it can't exceed transaction with manifold ramifications. Crime is easily committed in fraud, illegal, and unscrupulous social activities where anyone can in any instance throw money to let his work done. Politicians generally perform their tasks whether legal or illegal in circulating physical cash which amounts about 28% (nearly 4.2 lac crores) of total in the country. Logically it can curb corruption and facilitate easy execution of transactions, emanate theft consequences but accommodating each and every section of society into the grasp of going cashless sounds not so good. Again, Cyber hacking is also a threat for those perform cashless transactions. Privacy concerns are even indomitable ( eg Hitachi Private Services regime when about 33 million debit card accounts have been hacked. Ola Cab services even tried to refuse cashless payment sure at some point of time.

For instance someone (particularly myself) who desires to have a petties of Rs.15 have to pay Rs.2.50 as transaction cost and that goes directly to shopkeepers pocket which is not in favour of curbing black marketing .Inference drawn from this is transactional tax is not an indirect tax and does not comply with the regime of GST. Internet users which is only about 43% of total populations in a good demographic dividend is a meagre compared to 15% who have active broadband connections at their working places.

What has govt done so far

Raipur, Chattisgarh has become the first state to go utmost cashless with installation of about 1500 POS ( point of sale) machines.

Meityy has launched an official channel "DigiShalla" , an initiative taken by govt of India under the aegis of Ministry of Information Technology and Ministry of Human resource development in the state of Haryana also adds to this.

e-Vendors have been installed in Gujurat and Chattisgarh to promote cashless transactions in day to day goods and services.

VISHAKHA (Vitiya Sakhsharata Abhiyan) has been launched the very last year to promote digital literacy.

NOFN measures literally induce secure transactional copies at each and every point of deals.

Way Forward

Despite of such steps, India still lags a lot behind to be cherished by cashless economy due to illiteracy ,less knowledge about technologies, and a more like expression being delivered when someone is asked to swipe his debit card. Govt rather taking all of sudden such step , should have to wait for at least 2 to 3 years to at least acquaint people about such initiative. Separate grievances cell like permanent Consumer Guarantee Protection Fund to be established with prior appellate authority to be appointed.

"Lies a small line of intricacy between CASHLESS economy and LESSCASH economy which needs to be demarcated, else vagaries will be threat, since everything flows downhill".


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