Even cash machines redundant in three years, say officials; other stakeholders doubtful
Jaipur, Jan 22 (IANS) India will soon become a majorly cashless economy with even cash machines becoming irrelevant in the next few years due to the exponential growth of mobile phones for transactions, maintained top government officials, but other experts on the panel were sceptical of the timeframe and whether the necessary infrastructure was in place.
And demonetisation was also necessary to “enable the push towards a digital economy in a much quicker way”, said NITI Aayog CEO Amitabh Kant.
“We’re in the middle of a major disruption, At the moment, 85 per cent of transactions are in cash, which creates more opportunities for ‘black money’. But we have seen extraordinary growth in mobile phones, meaning the infrastructure for a cashless economy is there.”
“Within three years, cash machines in India will be completely irrelevant,” said Kant at a session titled ‘Brave New World: The Virtual Economy and Beyond’ at the Jaipur Literature Festival 2017’s third day on Saturday.
Citing the example of Kenya, which is “less banked and less advanced technologically” yet sees 50-60 per cent of financial transactions happening on phones, newly-appointed Information and Technology Secretary Aruna Sunderarajan said: “Once the four big telcos swing behind digital banking, which will happen next year, the cashless economy will grow exponentially.”
However those from academia and business were less than confident of this eventuality.
“It’s true that mobile phone usage has grown exponentially, but that was because landlines didn’t work. The government took the wrong lesson from this. It never forced people to use mobile phones. Government got out of the way; it let people choose to use them. It happened naturally, not by government pushing it. That’s how to leapfrog forward technologically,” said author and columnist Mihir Sharma.
Banker and Ambit Holdings CEO Ashok Wadhwa was also doubtful, questioning this timeframe.
“No question that’s the destination, but things don’t always happen that quickly in India. It took a decade to open up the stock market in the 1990s. I personally think the transition to a cashless economy will also take longer,” he said.
Moderator John Elliott, author of several books on India, was also sceptical, noting if he could not even access internet in the heart of Jaipur, how would this all take place in in three years.
As Kant emphasised that it would happen because technology would enable it, Sharma sought to know if it had been so easy then why did the government need to carry to undertake demonetisation, necessitating the forced removal of 85 per cent of the cash supply and was the shock needed at all.
While Kant defended the measure as a quicker enabler towards a cashless system, Wadhwa observed that disruptive policies have been responsible for rapid change before in India but now it called for “the right internet infrastructure in place” and removal of bureaucratic impediments for people to set up new bank accounts.
(Vikas Datta can be contacted at firstname.lastname@example.org)