Govt forcing move to cashless transactions rather than changing spending habits

If the move was aimed at turning India into a cashless economy, then the ideal thing to do was to make people adopt e-payments as a change of habit.

Written by Kanishka Singh | New Delhi | Published:November 27, 2016 4:43 pm
demonetisation impact, demonetisation economy impact, cashless transactions impact, cashless economy, india economy change, demonetisation news The government should have given enough incentives to people to move to cashless transactions, ensure small vendors are equipped with point of sale terminals or e-wallets to take payments.

Prime Minister Narendra Modi admitted on Sunday that he understands making the transition to cashless economy is difficult and hence he urges people to move to less cash society. However, the whole exercise of moving from cash-driven economy to cashless economy has somehow been mixed with demonetisation which was apparently done to suck out liquidity from the system to dig out black money.

It is a mammoth task to achieve even one of the two. Aiming for both in one move is risky and to some extent reckless. Indian society functions primarily on cash due to lack of penetration of e-payment modes, digital illiteracy of e-payment and cashless transaction methods and thirdly habit of handling cash as a convenience.

If the move was aimed at turning India into a cashless economy, then the ideal thing to do was to make people adopt e-payments as a change of habit and not as a last ditch option in a cashless crisis situation.

The government should have given enough incentives to people to move to cashless transactions, ensure small vendors are equipped with point of sale terminals or e-wallets to take payments and wait till the time the country actually comes on board the digital India boat. If a majority of the population is first allowed that chance to move to e-payments via change in habit, such a liquidity cut would not turn out to be as big an issue as it is today.

The government has made further attempts to push its departments from cash transactions to cashless transactions. Urban Local Bodies of 4,041 cities/towns in India where at least 30 crore of the urban population resides have been told to shift to cashless transactions.

Officials have been directed by the government to promote internet banking services like RTGS/NEFT, online banking via credit/debit cards or by way of Public Finance Management Systems (PFMS). The Urban Development Ministry has said that both income and expenditure will shift online.

Now, this will mean that people will have to make e-payments in matters of property tax, professional tax, utilities like water, power & gas, fee and licensing charges, online bookings of community halls for functions, issuing or renewal of birth and death certificates, registration of shops, library membership et al.

It has also directed wages to be transferred through e-payment channels for both regular and contractual workers, payments related to any work whether contractual or not, procurement of articles, beneficiary transactions etc.

In rural areas, farmers and poor people are still struggling to get their hands on their own money. They are selling their produce in mandis at throwaway prices because buyers don’t have cash to pay them. Mobile ATMs and Micro ATMs have been a rare sight and normal ATMs usually stay shut at least a couple of days every week now. So the change in habit seems to be forced rather than incentivised and simplified for convenience. Also, it remains limited to urban areas. Rural population is left in worse off conditions.

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    Abhinav Gour
    Nov 27, 2016 at 11:45 am
    I believe that's a naive outlook, as to change "habits" of a people the effort and time required requires the psyche of a nation to chamge which i believe os required im many fields also like cleanliness, lack of sense of personal space, lack of volume control, respect for women, driving sense, .... I could go on. The keasure may be painful for sime more time but overall it is a neasure which will show its full impact within six to ten months
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      ak dev
      Nov 27, 2016 at 9:27 pm
      Can you please give me one vegetable vendor name who won't accept your as s.
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        ak dev
        Nov 27, 2016 at 1:39 pm
        I have not heard any of the critics themselves had suffered much. They are imagining about other's problems but not a word about their own contributions to help others whom they say are suffering. They are all caught unprepared as Modi has rightly said. But they can't tell how much money they have lost as useless papers now. They express their anger by citing cases of other's sufferings.
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          Vijay
          Nov 27, 2016 at 2:57 pm
          Agree absolutely...while the ideas are good but implementation has been poor and inconsiderate of people's habits ..it has become authoritarian approach of implementation rather than an approach based on incentive
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            Dash
            Nov 27, 2016 at 4:52 pm
            Rome was not built in a day. Things change. You need to be positve. Desh badal raha hai. We are marching towards absecure future thanks to Modi.
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            1. D
              DA
              Nov 27, 2016 at 12:31 pm
              It was not sustainable that only 3% of us pay income tax. This hurts the poor most, since they then have to bear the brunt of higher taxes on goods.lt;br/gt;lt;br/gt;For taxes on income to be enforceable, we do need to move to cashless economy. It will has involved some pain for all of us, but it is our battle to fight and win. It very rarely happens, political will and public will are aligned.
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                Harry
                Nov 27, 2016 at 9:07 pm
                There will be pain in the future. But the pain was there is the past seventy years as well. Nothing new here. But now the poor will get better deal which has been denied to them for a long time.
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                  Hudaf Shaikh
                  Nov 27, 2016 at 12:33 pm
                  The mandi committees should not allow traders and procurement agencies to pay farmers in cash - instead should insist on them crediting the proceeds to the farmers accounts.lt;br/gt;lt;br/gt;To make it easier for farmers to withdraw their money, mandis should allocate space for banking agents with micro ATMs to operate from their premises.
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                    kamath Ramesh
                    Nov 27, 2016 at 11:38 am
                    It is really a good idea to transact through mobile rather than cash. Even in some remote villages road side vendors are accepting money through paytm. Why all cannot use such modes?
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                      Ramakrishnan
                      Nov 27, 2016 at 4:42 pm
                      Cashless transactions will stop tax evasion and generation black money.
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                        Kamal
                        Nov 27, 2016 at 6:12 pm
                        The author seems to be day dreaming into thinking that 70 yr habits can be easily changed by persuading people to move to cashless banking. How many people were using Jan Dhan accounts that were free before the demonetization took effect and how amy after. Habits change by carrot and stick approach. Carrot was the Jan Dhan accounts with debit cards and stick is lack of liquidity.
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                        1. S
                          shahid
                          Nov 27, 2016 at 11:43 am
                          Dur ka dhol suhana lagta hi.
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                            Smart Cookie
                            Nov 27, 2016 at 4:48 pm
                            Now cops will have to setup corporations and buy card swipe machines to take on road bribes. Bureaucrats will have to invent new ways as card swipe for large amounts can be caught easily... their transactions will likely be in gold. Ministers are already creative.. they only deal with overseas and real estate.
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                              mathimathi
                              Nov 27, 2016 at 6:56 pm
                              feku couldn't make cashless transactions of his Rs 4.31 crore Suit Auction.
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                                Mahender Goriganti
                                Nov 27, 2016 at 12:00 pm
                                There is no force involved in it. either a coolly nor a street vegetable seller is going going to paid in 400/1000 notes nor the people. But anything more than 1000/2000 is better paid with check or a card (digital) to safe gurd ones money and also prevent the same vender, not paying taxes, insted using the same back money or others to put you at disadvantage to buy anything at higher prices.
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                                  P.De Menezes
                                  Nov 27, 2016 at 10:29 pm
                                  the poor are not being exploited but are learning how to be corrupt by allowing their JanDhan accounts to be mis-used for a fee....... the w country from top to bottom needs to wake up and see where we are heading.....corruption has to be squeezed out from our veins
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                                    Prasanna Khakre
                                    Nov 27, 2016 at 12:28 pm
                                    The issue is the secular writer is asking habitual change in people's mindset, which the secular political parties had neither wished to happen not they have attempted to do make it happen because they were not interested in changing people's mindset and habit and now the shameless secular political parties asking the NDA the same. What a bloody shame. After governing the nation more that 57 years during which these secular political parties "zak maar rahi thi". Now a sudden memorization and advice! why not because we have done enough corruption now it is your duty to change people mindset.
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                                      SARABJIT
                                      Nov 27, 2016 at 11:49 am
                                      Why not no cash payments to party funds. Start at home.
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                                        prabhu
                                        Nov 27, 2016 at 2:08 pm
                                        Former Prime Minister Dr. Manmohan Singh said in Parliament that demonetization will bring GDP down. Can he explain which GDP - white GDP or Black GDP?lt;br/gt;we do not mind white GDP going down. But we want to eliminate the Black GDP component.lt;br/gt;Political parties (opposition) are lamenting on the hardship of common man due to demonetization. In truth, they are fighting a proxy war for their own party and its black money donors
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                                          Ram Sekhar
                                          Nov 27, 2016 at 3:22 pm
                                          Rural Kenya does a lot more mobile payments than rural India!lt;br/gt;lt;br/gt;Our villagers are much more capable. You should be more optimistic and proud of our villagers.
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                                            Ram Sekhar
                                            Nov 27, 2016 at 3:16 pm
                                            The author rather frivolously suggested that the govt should 'change habit'. Does she understand the different ways of making that change? People like her 'postpone change'. lt;br/gt;lt;br/gt;Modi Makes Change Happen. lt;br/gt;lt;br/gt;She also comes across as very low in ambition and seems to avoid risk. lt;br/gt;lt;br/gt;Modi boldly embraced risk for the sake of the nation. The move towards a cashless economy is 'Above Politics' and the country NEEDS it.
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