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Are We Better Off in a Cashless Society?

Are We Better Off in a Cashless Society?

By Jyoti Singh


The Digital India initiative was launched on the 1st of July, 2015. It aimed towards making India a digitally empowered nation and for the establishment of a cashless economy. The initiative aims towards “Faceless, Paperless, Cashless” digital Indian economy. The digital India initiative gained momentum in 2016 when the government decided to demonetize the economy where Rs.500 and Rs.1000 notes were stripped off their status of legal tender. In the absence or scarcity of the larger currencies, businesses had no option but to resort to cashless transactions in order to avoid losses.

A cashless economy refers to an economy where all transactions are made using digital methods like debit cards, credit cards, e-wallets, point-of-sales-machines. In such an economy the use of paper currency is very limited.


The concept of a cashless society is being stressed upon due to its numerous benefits. This initiative may prove to be significant in shaping the Indian economy. It boosts the economy and makes transactions hassle-free. It is very convenient, available 24x7 and makes a recording of transactions easier for individuals. It cuts the cost of making and circulating coins and paper currency. Further, in a cashless society, there can be better accounting and terror funding can be reduced significantly as most of the terror funds are in the form of hard cash, the illegally stored black money.

It is also to be noted that with the introduction of the cashless society, financial crime rates including offenses like theft, robbery, etc will considerably decline. It can also be helpful in solving the problem of fake currency as no cash means no fake currency. A cashless society will also ensure adherence to labor laws since the workers’ wages will be debited in their bank accounts and provisions of equal remuneration, minimum wages, paid maternity leave will not be declined.

It can solve the problem of tax evasion as in a cashless economy will be through organized channels, i.e banks and other financial institutions and all transactions will be properly recorded, making the system transparent and increasing tax base at the same time. It is also seen as a step to curb the menace of black money as it will become next to impossible to store black money if the economy goes cashless.


However, there are two sides to every coin. Going for an entirely cashless system does have its dependency. It is largely depended on the banking connectivity.

In case, a card goes out of service, it can create great inconvenience and distress to individuals. Moreover, in a country like India where an educated population is a distant dream, making the banking structure complete online is expecting a population which cannot afford two square meals a day to possess smartphones. It is also to be noted that automation and online transactions in business and banking will add to the already massive problem of unemployment by cutting jobs in several sectors. Also, expecting small scale businesses to invest in the establishment of electronic payment structure is unrealistic. It also creates chances of increased cyber crimes and fraud.


Of course, we are. Who doesn’t enjoy the comfort of booking tickets for a movie on ‘Bookmyshow’ or ordering food on ‘Zomato’ without any hassle of cash transactions? It is easy for individuals who live luxurious or even decently comfortable lives to support digitization and a cashless economy, because why not? It is absolutely desirable. But the real questions are - How far is this possible? How far is the dream of digitization and cashless economy real?

According to a TRAI report which came out in 2016, 82 out of 100 Indians owned a mobile phone but it is also to be noted that only about 29% of the Indian population uses the internet.

Further, about 60% of Indian population lives in rural areas where internet connectivity, at least before the advent of Reliance Jio, was relatively poor. Security threats are also very common. The Indian Computer Emergency Response Team (CERT-In) has report over 39,000 security threats in the year 2016 alone.

Further out of 46.5 crore Indians who are employed 43.7 crores are employed in the unorganized sector as per a report of the National Sample Survey Organisation. It was difficult to introduce digitalization in the informal sector in a short span of time. It requires huge infrastructure building, which the government has been ignoring for the longest time and is failing to introduce stern reforms and efficient programs to convert India into a cashless economy. Magically dreaming to transform India into a cashless economy where individual buy potatoes and eggs through e-wallets, without taking adequate steps towards such transformation is like expecting a plant to grow without providing it sufficient water or sunlight.


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