Is it utopian? Where there is a will, there is a way.
Given an economy which has more than 125 crores people, more than 25 crores households, 90% of transactions in cash, 50% of population is underbanked and less than 10% having cards and mobile wallets is the dream of having a cashless economy achievable? Or is it just a utopian idea? Is this called Demonetization in India.
With an average per capita income of Rs 96,000/- per annum, it translates into earnings of Rs 1000 for 4 days of work. Given household savings of nearly one third , it is about 30K per year, a lot of it in cash.
That’s why with the recently announced demonetization, the large queues at banks and ATMs is natural. Bank deposits in the last few days bear out the above mentioned assumption.
A plumber or a laborer with earnings well below the taxable threshold is part of this crowd. Add to that the informal legal economy of small traders, marginal farmers and service personnel and the crowd becomes larger.
While tremors of the Centre’s demonetization move resulting in acute scarcity of cash are felt across the country, Akodara about 90kms from Ahmedabad is an oasis of calm. It is India’s first ‘digital village’ where all families fall back on e-banking for everything – from buying milk to biscuits – through their mobile phones.
With a projected 900 million mobile phone subscribers across the length and breadth of the country, by the end of 2017 and nearly 500 million internet subscribers by then, it is not difficult to spread the small example of Akodara across major parts of the country.
Once there is a larger resolution to opening of bank accounts through eKYC and use of Aadhaar card across the length and breadth of country more and more people will open bank accounts and the underbanked populace will reduce.
The far greater challenge is to overcome the need to generate unaccounted money and strict enforcement of laws against the generation of the same.
Cash less economy is especially true of the 20-40 years old educated class employed in financial services, e-commerce, retail, IT/ITES, consulting etc and they being in the majority in terms of country’s demographics may become the torch bearers for the country to move into a cashless economy, once more and more people in that age group get suitably engaged in business or employed.