The demonetisation drive undertaken by Prime Minister Narendra Modi is a right step but it was poorly implemented. People are now learning to make payments through digital mode. Currency ban is a good business opportunity for payments banks and mobile wallet companies. In this learning spree, we have forgotten work. Government should have done its homework properly before going ahead with the note ban drive.
India’s population is rising alarmingly and unemployment is going to increase but we are discussing about digital payments. Citizens have been using debit cards for withdrawing money from ATMs but now more people will start using it for performing online transactions. Even shopkeepers have started installing POS (point of sale) machines as they have been witnessing a fall in sales on account of note ban.
Overall, the usage of debit cards has gone up 70 per cent and of credit cards, by 40 per cent, suggesting a sharp jump in first-time users. A recent RBI data shows that the number of debit and credit card in the country as of September 30, 2016 is pegged at are at 754 million as of September 30, 2016 as against 625 million in the year-ago period in a country with population at 1.3 billion.
People are now being encouraged to use mobile wallets to pay for buying commodities from grocery shop and auto rickshaw fare. Today mobile wallets have become a necessity after demonetisation. RBI data show that ATMs account for 88 per cent of debit card usage while PoS terminals and online transactions account for the remaining 12 per cent. This is also because of the poor Internet and broadband connection in the small towns and rural areas of the country, which also explains why India is largely a cash driven economy at 90 per cent.
Earlier, the banks worked manually and registered accounting entries in books of accounts later on all of them were fully computerised. We used log tables and slide rules but now we have calculators and computers. Earlier, transacting online was access-restricted (not everyone had credit/debit cards), complicated (entering netbanking/card details every time) and often had high failure rates because of tedious processes. On the other hand, there have been rising instances of transaction failure due to server issues as it has been unable to cope up with the large volume of transactions being done online. Hunger and malnutrition are the issues that need to be addressed at the earliest. The need of the hour is to work sincerely and silently without the need for appearing on television and delivering messages through radio. The Modi government is more interested in garnering publicity and is not doing ground work.
(The views expressed by the author in the article are his/her own.)