India Goes Cashless – Lily Chishi, Assistant Professor, Department of Economics

Source: The Economic Times, India

The economy of India underwent another massive change with the implementation of the Goods and Services Tax on the midnight of 30th June 2017. The GST is ambitious and hopes to create jobs and raise national revenue. Over the past few months now, India has been attempting to go cashless. Technology is changing the way we live and work, leaving behind a trail of mixed responses. So, what does it really mean to go cashless?

India Goes Cashless

‘Going Cashless’ is now the big buzzword in India, and the ball is rolling as the world’s largest cash economy begins going digital. It has left citizens with mixed emotions because more than half of the country’s population either fears the new system or are unable to comprehend the idea of going cashless. Nevertheless, a cashless economy is really a bold move considering the fact that Indian people are quite reliant on hard cash. One is left to wonder how a cashless economy is beneficial to the country and its people. Is it going to benefit everyone?
In a cashless economy, transactions will be done by digital means like e-banking, debit and credit cards, point of sale (POS) machines, digital wallets, etc. In simpler words, no liquid money or paper currency will be used by the people. In a cashless economy, a third party will be in possession of our money. It will ensure a corruption free economy and attack the parallel economy. In India, welfare programs often suffer from the chronic problem of corruption and the non-implementation of schemes. A cashless economy would solve these issues since the movement of currency can be traced.
Any monetary help to the poor and the needy people can be made through bank transfer, even payments for rural employment generation schemes like MNREGP. This way there will be no instances of middlemen syphoning off the aids and exploiting the poor and illiterate people. A cashless economy would make it easier for tourists as well. The deplorable practice of buying votes by distributing cash to the electorates would also be reduced, and true democracy would be finally at work. It would enable the government to check the supply of money for terror activities.
No doubt the Central government is making a big push for the cashless transaction in the country to achieve its target of becoming the largest cashless economy. However, it seems like the country is not ready for such an immediate shake-up. Although the Pradhan Mantri Jan Dhan Yojana launched by the government succeeded in bringing millions to the banking system, the process is not complete and many of the accounts are non-functional. Hacking and cyber thefts are grave dangers that plague the digital world, and therefore a strong security system must be put in place.
One thing to be considered is the presence of rural and remote areas where the cashless economy initiative may take a few more decades to be fully implemented. Take for instance Nagaland. Our state has so many other crucial issues it needs to tackle first, like that of unemployment, bad road conditions, corruption, unresolved political issues, and most essentially, shortage of electricity, poor internet connectivity in many areas which can directly affect the execution of a cashless economy. Though this system may work wonders in developed cities, it won’t work in states like Nagaland, unless massive changes are made and various facilities are improved. The world is starting to exist in a digital realm, and states like Nagaland have a lot of catching up to do. I am positive that cashless economy, once implemented in Nagaland, would improve our state greatly.
Many of our business transactions had to be cashless after the demonitization. This proved to be especially tricky in an underdeveloped city like Dimapur where most shops still do not have the card swiping machine, nor do they have payment options like Paypal and Paytm. Do we have the equipment ready to support this system? Many of the buyers and sellers are concerned about the extra tax deducted when cashless transactions are made. These convenience charges may not seem very good for those living below the poverty line.
The availability and quality of a stable internet network will play an important role. People are facing difficulties in making electronic payments even in metro cities because of the poor network. Secondly, one of the biggest beneficiaries of this transaction, banks and related services providers, will have to constantly invest in technology in order to improve security and cash transaction. People will only shift when it is easier, certain and safe to make the cashless transaction. Thus, the government will have to find better ways to incentivize cashless transaction and discourage cash payment.
India may not fully become a cashless economy in the foreseeable future but it needs to reduce its unusually high dependence on cash to bring in much-needed transparency and efficiency in the system. India hopes to create a cleaner, more transparent economy via digitalization that will lead to an improved climate for foreign investment, boost economic growth, and ultimately prepare the country for the next chapter of its emerging markets stop.

There are also marked class issues which are built into India’s cashless transaction. India is a country that has one foot in the future and other in the Stone Age. This is a country that has one of the most vibrant and high-tech ecosystems in the world along with hundreds of millions of people living in villages who are comfortable with technology that’s hardly more sophisticated than a bullock cart and plough. Both the old and new India have a parallel existence. Only 17% of the Indian population currently has access to a smartphone. India culturally believes in cash and a paradigm shift in thinking will need time and resources. The way people pay for things is rooted culturally, and often hard to break. But once they are broken new ways emerge. A new pattern becomes solidified as societies update the way it functions.
Degree of Thought is a weekly community column initiated by Tetso College in partnership with The Morung Express. Degree of Thought will delve into the social, cultural, political and educational issues around us. The views expressed here do not reflect the opinion of the institution. Tetso College is a NAAC Accredited UGC recognised Commerce and Arts College. The editors are Dr Hewasa Lorin, Anjan K Behera, Tatongkala Pongen, Nungchim Christopher, and Kvulo Lorin. Portrait photographer: Rhilo Mero. For feedback or comments please email:

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