Cashless economy has become a buzzword after the Modi’s Government announcement of demonetization exercise on Nov. 8th to curb black money from Indian economy.
Cashless doesn’t mean ‘without cash economy’ rather it means least or less cash into economy. It is a step towards the digital economy because it ensures that the digital fingerprints of all the transactions are available.
India has one of the highest ratios of cash to GDP in the world. Last year, 78% of all consumers’ payments in India were made by cash, whereas in the developed world like US /UK, only 20 to 25 % payments were made that way. According to a 2014 study by Tufts University, The cash operations cost of the Reserve Bank of India (RBI) and commercial banks is about Rs. 21, 000 crore annually. Cash economy facilitates the black money, fake money, money laundering, drug trading, tax evasion, no transparency, corruption, etc. Certainly, cash economy has its benefits such as it empowers unbanked families, easy transaction, acts as a store of value, no transaction fee, and no records of big data and provides safety from hackers and online transacting companies. In the present era, the benefits are losing relevance and cashless is a way for honest, transparent, safe and secure society. In such scenario cashless economy is a boon for Indian economy. Continue reading