The buzzword now in the post-demonetisation days is cashless economy. A change to ‘less-cash economy’ and later to ‘cashless economy’ is the new punch line of Narendra Modi government’s changed demonetisation narrative. It believes in target-based massive disruptions in the social equilibrium to attain quick results, not gradual transition. For this reason, both the government and the Reserve Bank of India (RBI) are pushing the banking system hard to nudge the public to embrace alternative payment modes to cash transactions, mainly using mobile payment platforms and Point of Sale terminals. Is India prepared for this change?
Going by the data available so far, the citizens in metros are willing to try out the new way of payments but the rural Indian isn’t yet ready for an overnight transition to a cashless world. That’s the sense one gets when analyses the RBI studies and other private surveys. According to an SBI research report, though there has been an increase in the volume of card-based transactions post 8 November (When PM Modi announced demonetisation), however the value per transaction has dropped.
Nevertheless, why there has been an increase in non-cash transactions since demonetisation? This spurt is artificial and a forced one by the government’s decision to pull out 86 percent of the currency in circulation in one go.
It is like saying when you artificially spike the price of vegetables to an unaffordable level to common man, he will start using meat and egg products more. That’s not necessarily because of his sudden love for meat but simply because vegetable isn’t affordable for now. For the same reason, when the veg prices come down again, there is a likelihood of many of these people returning to their old consumption pattern. Even in such a scenario, many vegetarians would rather start eating less than beginning to eat meat.