5 Steps to Digital India

A lot of water has flown under the bridge of de/remonetization which was launched last month by the PM Modi himself. There is all kind of arguments on both sides of the table. There are few people who have already declared the initiative a failed one, while there are others who are waiting patiently and watching the situation unfolding. Economists have their opinions but are not able to find a precedent to back their opinions. 

In this write-up, I would stay away from declaring this effort a success or a failure. I would only focus on how can we use this opportunity in a better way to reduce M0 and M1 money (currency in circulation) and march towards a less-cash India, if not cashless.

As has been said about PM Modi also, you may like demonetization, you may hate it, but you are very lucky if you can ignore it as it means you are not impacted by the exercise very much. In last one month, if you haven't stood in an ATM queue even once, then either you are rich enough to have somebody to stand for you OR you are already fully digital and having a gala time with cashless transactions.

Whatever may be the case and situation you may be in, one thing we all would agree is that cash is still a coveted commodity even after a month. To face this enormous challenge, a push to Digital money was inevitable. And undoubtedly, what might have not happened in next 5 years, has happened in last one month, at least on Digital Payment front. People who had never used the plastic money, OR had never heard of Mobile Wallets, are getting accustomed to them. The government has also rolled out a plethora of campaigns and discounts to push it to the lowest strata of the society.

With 5 different ways (Netbanking, Credit/Debit Card, UPI, MobileWallets, and USSD) of making a cashless payment, India is doing everything under the sun to ensure everybody has a way to make the cashless transactions, which itself is not a mean feat.

However, one thing I am not sure is if the government is hitting the nail on its head or sideways. People who have made or accepted cashless payments are very much aware that it is the 'transaction fee' that stops people from adopting the plastic money OR mobile wallets. I strongly believe, the government hasn't put its focus to deal with this till now. If India wants a wide-spread adoption of Digital payment methods, it shall take following five steps immediately:

• First, it shall redirect all the campaign & promotional money to make these transactions cheaper or at least as expensive as the Cash transactions are, which essentially means free.
• The second step for the finance ministry is to make a fresh push for UPI and make it more user-friendly with a state-owned app. It should become SBI(Government backed entity commanding the trust of ordinary Indians) of digital payments.
• The third step, ensure each and every bank of India has a Rupay-based Credit/Debit Card. It will reduce the transaction cost from 2-3% to .75%, OR even lower.
• The fourth step is to put a renewed focus on telecom infrastructure, call drops, and taking 2G/3G to each nook & corner of the country. This would be the lifeline of Digital economy.
• The final step, the government should declare any cash transaction above Rs. 50,000/- illegal from April 2017 while also declaring a cash quota for every individual to Rs. 50,000/-.

I hope Mr. Prime Minister & Mr. Finance Minister appreciate the fact that to replace cash, we need a weightless (no burden of transaction charges) payments.